LEADERSHIP FORECAST 2005 | 2006 Best Practices for Tomorrow’s Global Leaders > Paul R. Bernthal > Richard S. Wellins

LEADERSHIP FORECAST 2005 | 2006 Best Practices for Tomorrow’s Global Leaders > Paul R. Bernthal > Richard S. Wellins

A Welcome from the Authors

We are pleased to present our latest edition of the At DDI, we believe that leaders and employees are the Leadership Forecast study. Since 1999, when we life force behind organizational success. To remain conducted the first study, it has increased tenfold in size competitive in the long term, organizations must be able and scope. This growth parallels the reach and to successfully select, develop, and grow their leaders. importance of leadership in today’s world, in which we No single approach to leadership development is right for have seen enormous changes in business and politics. every organization, but there are practices that have been proven effective. We titled this report “Best Practices for Tomorrow’s Global Leaders” because we feel that all leaders will We hope that this report will provide you with insight into eventually experience a world economy that is quickly best practices and encourage further investments in blurring the lines between countries and cultures. leader development. Leaders need to look beyond their day-to-day challenges to a business world that most likely will be very different than today’s. They must ask: Does the organization have the right leaders for tomorrow? Do those leaders have the necessary skills? Are they ready? N S Since 1970 Development Dimensions International has worked 1997–1998 with some of the world’s most successful organizations to achieve A Survey of Trust in the Workplace superior business results by building engaged, high-performing Performance Management Practices Survey Report workforces. Workforce Development Practices Survey Report Job/Role Competency Practices Survey Report We excel in two major areas: Designing and implementing selection systems that enable you to hire better people faster, and 1998–1999 identifying and developing exceptional leadership talent crucial to Succession Management Practices Survey Report creating a workforce that drives sustained success. Recruitment and Selection Practices Survey Report Global High-Performance Work Practices: What sets DDI apart is realization. We focus on the needs of our A Benchmarking Study clients and have a passion for their success. The outcome? You The Leadership Forecast: A Benchmarking Study bring the best people on board, who get up to speed faster, contribute more, and stay longer—giving you the ultimate 2000–2001 competitive advantage. The Globalization of Human Resource Practices Survey Report Retaining Talent: A Benchmarking Study Leadership Forecast 2001: A Benchmarking Study

2002–2003 The State of e-Learning: Developing Soft Skills Managing Performance: Building Accountability for Organizational Success

2003–2004 Leadership Forecast: A Benchmarking Study

2004–2005

© Development Dimensions International, Inc., MMV. Pittsburgh, Pennsylvania. All rights Selection Forecast: Recruiting and Hiring Talent reserved under U.S., International, and Universal Copyright Conventions. Reproduction in whole or part without prior written permission from DDI is prohibited.

2 Leadership Forecast 2005–2006 NNS Sponsors ...... 4

Introduction...... 6

Study Sample and Objectives ...... 7

How Effective Are Leaders? ...... 8

Leader Development ...... 14

Leader Turnover ...... 20

Growing Leaders ...... 22

The Pressures on Leaders ...... 27

The Drive to Be a Leader ...... 33

Conclusions and Recommendations ...... 36

Endnotes ...... 38

Demographics ...... 39

Participating Organizations ...... 41

About the Authors...... 50

About the Research Team ...... 50

Acknowledgements ...... 51

3 SNSS The Joseph M. Katz Graduate School of Business The Chartered Institute of Personnel and Development

The Joseph M. Katz Graduate School of Business The Chartered Institute of Personnel and Development (www.katz.pitt.edu) has been ranked consistently in the top (CIPD) is a professional body whose mission is to lead in 50 MBA programs in the United States. The Katz School is the development and promotion of good practices in the among the Top 10 Public Universities in The Wall Street Journal/Harris fields of managing and developing people. CIPD also serves the Interactive Top Regional Business Schools ranking. As one of the 17 professional interests of its members, which number more than 120,000. The founding members of the AACSB, Katz is home to one of the first federally CIPD conducts research into many issues related to the management and funded centers for international business and research. Both its Techno MBA development of people. Further details of CIPD research can be found at Program options and Evening Program have earned recognition as top 20 www.cipd.co.uk. programs from U.S. News & World Report. Warwick Business School Human Resource Executive® Warwick Business School (WBS) (www.wbs.ac.uk) Established in 1987, Human Resource Executive focuses on the central problems facing global business is a premier publication written for executives managers and leaders. Its mission is to command an in the human resource arena. The magazine international reputation for high-quality education and research in provides these key decision makers with the latest news as well as management and business in both the public and private sectors. WBS’s profiles and success stories of human resource visionaries and teaching has garnered an excellent rating by the Association to Advance innovators. Articles focus on strategic HR issues and cover all related Collegiate Schools of Business, and its research has been awarded a five- areas, including personnel, benefits, training and development, and HR star rating for international and national excellence. More faculty members information systems, to name a few. More than 75,000 receive this are submitted for assessment than from any other business school in the magazine, which is published 16 times a year. The magazine also United Kingdom. produces a leading HR web site, www.workindex.com.

4 Leadership Forecast 2005–2006 ESB-European School of Business Reutlingen The Club ESSEC RH In the course of its 25-year history, the European School The Club ESSEC RH is comprised of HR directors and of Business (ESB) (www.esb-reutlingen.de) has evolved professionals who are former students of the well-known from a unique undergraduate program to an elite ESSEC Business School (www.essec.fr) in France. business school with an excellent international reputation. The reasons for ESSEC has been training business leaders since 1907, and its reputation is this success lie in an integrated study program involving partner universities growing worldwide. This international recognition has been spurred by the in various countries and handpicked students. The school also has earned launch of the ESSEC Asian Centre in Singapore and by exchange first-place rankings from Stern Magazin and Handelsblatt/Karriere, two agreements with some of the best business schools in the world. With an leading German magazines. increasingly international faculty and student body, ESSEC promotes such values as responsibility, international awareness, innovation, and humanism. Personalmagazin Personalmagazin (www.personal-magazin.de) Management Association of the Philippines boasts the largest circulation of any human The Management Association of the Philippines (MAP) resource trade publication in the German-speaking (www.map.com.ph) is a 55-year-old management area. The magazine targets human resource managers and directors who organization whose members represent a cross section work in both large- and medium-sized businesses. Its comprehensible and of senior executives from top organizations operating in the Philippines. cutting-edge articles deal with subjects such as management, leadership, MAP’s mission is to promote management excellence through various and law. educational activities and workshops, scholarship and awards programs, and development committees. The association also seeks to assist Groupe RH&M institutions in interpreting the needs of commerce and industry and to Specializing in HR leadership training, Groupe RH&M maintain close ties among CEOs, COOs, and other top executives. (www.global-rh.com) has the distinction of having created France’s largest networking platform in the HR sector. Today, more than 6,000 professionals, working in all kinds of industries, participate in its seminaries, congresses, training programs, events, and clubs. Its bimonthly publication is distributed exclusively to key decision makers in human resources and related areas.

5 NN Access Economics also predicts that the number of Australians aged 55 to 64 is expected to increase by more than 50 percent In a complex and changing world, highly skilled and experienced over the next two decades.4 The organizations that respond leaders at all levels—not just senior leaders—are becoming best to this challenge will most likely be the most successful. harder to find. Furthermore, the rush to fill open positions means that many leaders are unprepared when they start their In addition to the pressures of an aging workforce, leaders must new jobs. Because decision making often occurs at lower deal with a business environment that is both more stressful levels, line managers “now need to be as informed as senior and more demanding. With board and shareholder scrutiny of managers about strategic business issues, as well as cultural, leader performance greater than ever before, many CEOs find it human-resource, and marketing issues. And there is a growing difficult to hold on to their jobs. Some studies claim that the requirement for managers to have a global mind-set and priorities and motivations of younger generations have shifted manage across regions.”1 There may be more than one way to away from the hard-nosed advancement focus of previous lead effectively, but in most cases effective leadership requires generations. The younger generations may put a greater a balance of skills and personal qualities. emphasis on their quality of life and on opportunities to take on a variety of jobs and roles than on moving up the ladder. Many experts and researchers have written about an impending Additionally, the ever-shifting economic situation demands leadership shortage caused by an aging workforce and the leaders who can grow the business and take on an retirement of a large portion of the leadership population. While entrepreneurial perspective,5 not just control costs. Growth in the drop in pure numbers is a concern, the real danger to the an increasingly global economy makes the situation even more growth and stability of organizations worldwide is the loss of complex, demanding a broader set of skills from all leaders. experienced leaders who have a significant body of knowledge about their organizations and their industries. The U.S. General One of the best ways organizations can address the pressures Accounting Office predicts that by 2015, the number of workers on their leaders is to better prepare those leaders for their work older than 55 will balloon by 73 percent.2 Similar trends exist in and offer support and development opportunities. A 2005 most nations in Europe, Asia, and other parts of the world. study by Hewitt Associates6 found that the top 20 U.S. Access Economics,3 Australia’s leading economic consultancy, companies (as identified by the Human Resource Planning forecasts that Australia’s working-age population will grow by Society) are more likely than those not in the top tier to just 125,000 for the decade of the 2020s, compared with about rigorously develop their leaders and aggressively prepare them 170,000 people a year currently. for future challenges.

6 Leadership Forecast 2005–2006 Because people have an innate desire to learn and grow, they need the S S N S stimulation offered by development so that they do not lose their motivation, Participants of this study included 4,559 leaders and 944 HR representatives become complacent, or seek more interesting challenges outside the from 42 countries. The sample involved both public and private organization. The question organizations must answer is: How can we organizations from 36 industries; a large majority (63 percent) of the develop leaders and attract new ones, and then keep them? For most organizations employ more than 1,000 people. The leader and HR samples organizations the answer will include improved leader development, represented a wide range of levels and responsibilities. (See pages 39–40 succession management, and talent management practices. When leaders for a breakdown of demographics.) are strong and growing, the people they lead have greater confidence in themselves, feel more engaged, and execute the business strategy more This 2005–2006 study has five main objectives: effectively. 1. Determine current perceptions of leader strengths and capabilities. 2. Identify what it means to be a leader (i.e., motivations, pressures, Over the past 35 years, DDI has conducted ongoing research on the work/life balance). competencies that define effective leadership, monitored the evolution of 3. Identify the most prevalent and useful leader development practices. leaders’ various roles, and studied the practices that characterize strong 4. Identify differences in perceptions about leadership from various approaches to leadership development. It’s clear that building a strong viewpoints (i.e., human resources, leaders, international, various supply of leaders is a function of many systems, including selection, leadership levels). development, succession management, and performance management. No 5. Determine which leadership practices lead to improved organizational single approach to building strong leaders is right for every organization, but performance. some approaches have proven effective in many organizations.

By repeatedly assessing and reporting on practices related to effective leadership, DDI hopes to provide insights that will benefit our clients and other readers. Our first Leadership Forecast covered 1999–2000; two more studies followed (for 2001–2002 and 2003–2004); and now this 2005–2006 study. While some of the questions and topics have changed, we are able to show comparisons over time in the current study. This study differs from previous Leadership Forecast studies by including a broader global sample, a larger number of participants, and a new section on leaders’ feelings about their roles (e.g., pressures, motivations).

7 FINDING 1 S I believe that for many leaders, it’s easier to focus on Leaders think “ability to bring With regard to excellence, it is not enough to know, but we must the numbers. Many leaders lack the soft skills, and in the numbers” is the most try to have and use it. respected leadership —Aristotle (384–322 B.C.E.), Nichomachean Ethics organizations reward employees based on numbers. It’s much more difficult to measure the results of team behavior. In previous administrations of DDI’s Leadership Forecast, we building efforts, which may take months or even years. focused on measuring leader strength as defined by job It is a long-term investment without a fast result. FINDING 2 competencies. From 1999 to 2003, the four most important —Roxanne Christenson, HR Leader, leadership competencies remained the same: Adaptability, About one-third of internally Owens Corning sourced leaders fail, usually Building a Successful Team, Decision Making, and because of poor people skills Communication. In the future these competencies likely will or interpersonal skills. continue to rank high in the list of top skills for leaders. When asked to rate the same list, HR professionals gave their highest ranking to “ability to mobilize or motivate a team.” They In the current study we adopted a different approach, selected “ability to bring in the numbers” and “ability to take a measuring which leadership actions get the most respect. stand and make tough decisions” as their second and third These “respected” actions often are what lead to promotions choices. This finding may reflect HR professionals’ and recognition by the organization and senior leaders. understanding of how leaders add value to the organization or, FINDING 1: Leaders think “ability to bring in the numbers” more likely, a built-in bias toward the importance of people is the most respected leadership behavior. skills. From the HR perspective, leaders should focus on

We asked leaders to select the one action that garnered the engaging their employees—with a belief that performance will most respect for leaders in their organization. The winner was follow. In other words, HR appears to put a greater emphasis “ability to bring in the numbers” (see Figure 1). Clearly, leaders on how leaders leverage their organization’s human capital to earn the most recognition for achieving their financial and bring in the numbers. Leaders, on the other hand, know this is organizational goals, and this is their top priority. Ranked important, but they also recognize that, in the final analysis, it is second and third were “ability to take a stand and make tough the “whats” (i.e., meeting the numbers) that get the most decisions” and “ability to create a strategy or vision for respect. success.” The “people side” of leadership, including the use of interpersonal skills and the ability to mobilize a team, ranked lower in importance.

8 Leadership Forecast 2005–2006 FINDING 2: About one-third of internally sourced leaders fail, usually When organizations select new leaders internally, they often base their because of poor people skills or interpersonal skills. decisions on the leader candidates’ technical expertise or past performance, even at senior levels. While past performance is a good indicator of future What organizations respect in leaders does not appear to be the same as performance, new leaders need to be assessed relative to new job what causes their failure. HR professionals report that 65 percent of leaders requirements. For example, how many salespeople are promoted to selected internally stay in their positions and are successful. Of the leadership positions who, in reality, dislike coaching other people in sales 35 percent who are not successful, most fail because they have poor people techniques? Additionally, some personal qualities might hamper skills or exhibit inappropriate personal qualities (see Figure 2). In other effectiveness (e.g., a desire to focus on details or an inability to handle words, bringing in the numbers and making tough decisions get respect, but ambiguity). Organizations need to assess the leader candidates objectively it’s the people and personal issues that cause leaders to fail. These findings relative to their technical abilities and knowledge as well as leadership skills are consistent across geographic regions, with the same three to four and motivations. reasons for failure appearing at the top of every list.

FIGURE 1: Leader Actions That Get the Most Respect FIGURE 2: Reasons That Internally Sourced Leaders Fail

9 FINDING 3 FINDING 3: Over the past six years, HR lost confidence in The more positive perceptions of leaders might be heightened by Over the past six years, HR leadership, while leaders gained confidence. both their particular organization’s investment in leadership development and improvements in the economy. Compared to lost confidence in leadership, In all our Leadership Forecast studies, we asked leaders and previous years, good leaders are scarcer now. It also is possible while leaders gained HR professionals to indicate their level of confidence in leaders’ that the economic downturn from 2000–2003 eliminated many of confidence. ability to guide their organization over the next five years. the less qualified leaders, and those who remain are stronger and Figure 3 shows that over time, HR professionals have become well positioned for future challenges. The level of leader FINDING 4 less confident in leaders, while the leaders themselves have confidence might be more a commentary on the potential they see Three out of ten leaders fail become more confident. HR professionals could be taking note in organizational growth and the acceleration of their own careers. to demonstrate the key of the increased demands they see placed upon leaders and Leaders might feel better about getting through the tough times qualities necessary for how they regularly hear about the challenges of being a leader. and see a brighter future. In our 2007–2008 survey, we will see if effective leadership. Also, their jobs entail leader development, so it is no surprise the level of leader confidence maintains its upward trend. that they see being a leader as a daunting task.

55 53

50 47 46 45 43 43 43

40 40 39 Percent highly confident 35

30 1999 2001 2003 2005 Leaders HR FIGURE 4: Confidence in Leadership by Geographic Region FIGURE 3: Confidence in Leadership Over Time

10 Leadership Forecast 2005–2006 Confidence varies by leader level. Leaders, regardless of level, have the TABLE 1: DDI’S LEADERSHIP POTENTIAL INDICATORS greatest confidence in senior leaders (55 percent high confidence) and the > LEADERSHIP PROMISE lowest confidence in first- and mid-level leaders (37 and 39 percent high Motivation (Propensity) to Lead—has upward ambition; confidence, respectively). Many first-time leaders we spoke with said that they actively pursues leadership opportunities. feel poorly prepared for their roles and are struggling with the transition. Part of Authenticity—is genuine and true; has integrity; promotes trust; the lower confidence ratings for first-level leaders might stem from the obvious is confident. challenges many of them experience from being new in their positions. Brings Out the Best in People—optimizes talent; inspires performance; unites others toward common goals. Leader confidence varies significantly by geographic region (see Figure 4). Australia and New Zealand respondents reported the lowest level of > PERSONAL DEVELOPMENT ORIENTATION Learning Agility—learns from mistakes; learns new confidence, while the United States and Canada were the most confident. The information; is curious. gap between higher leader confidence and lower HR confidence was similar Receptivity to Feedback—seeks and uses feedback; across regions, except for Europe, which showed a higher level of agreement. accepts criticism; is humble.

FINDING 4: Three out of ten leaders fail to demonstrate the key > MASTERY OF COMPLEXITY qualities necessary for effective leadership. Adaptability—accepts change; adjusts quickly; balances many demands. Many studies have attempted to identify the key competencies that define Conceptual Thinking—thinks broadly; sees many effective leadership. These competencies likely would include a range of perspectives; understands connections. 7 both innate and developed abilities, knowledge, and skills. Over the past Navigates Ambiguity—simplifies complex situations; three decades, DDI’s research in leadership competencies has yielded a sees in shades of gray. typology of 10 leader qualities that are strong indicators of leader potential > BALANCE OF VALUES AND RESULTS and performance. These can be divided into four primary categories that Culture Fit—has personal style or qualities that fit address various skills, knowledge areas, and personal qualities important for with the company culture. success as a leader (see Table 1). Passion for Results—gets things done; overcomes problems; refuses to give up. We used these 10 leadership potential indicators to estimate the overall quality of leadership. HR professionals were asked to rate the importance of each quality; while leaders were asked to estimate the number of leaders in their organization who demonstrate these qualities in the workplace.

11 FINDING 5 Figure 5 shows the percentage of HR professionals that rated For their part, leaders also felt that demonstrating passion for Strong leadership can each quality as “critical” for leader success. On average, HR results in the workplace was what they did best. In fact, most increase successful rated the 10 qualities as “critical” 52 percent of the time. The effectiveness ratings provided by leaders themselves fell in the execution of business qualities rated as most critical included “passion for results” and 60–70 percent range. Overall performance in the 10 leader strategies by at least “brings out the best in people,” again indicating a focus on both qualities did not vary significantly by leader level. While these 22 percent. the outcomes and people sides of leadership. The lowest findings are encouraging, it is important to note that out of every importance rating was for “receptivity to feedback,” a key to 10 leaders, 3 or more are not effective in these crucial skill learning agility and individual growth. At DDI we provide areas. assessment feedback and coaching to thousands of leaders FINDING 5: Strong leadership can increase successful each year. Although HR puts less emphasis on receptivity to execution of business strategies by at least 22 percent. feedback, we find defensiveness about feedback to be a Leaders have the power to influence many of the factors that significant determinant of eventual failure. contribute to the successful execution of business strategies. Strong leadership can help an organization avoid the failure Passion for results 73 73 that is often experienced when trying to execute or implement Brings out the best in people 61 65 strategies. Leaders in our study estimated that about Adaptability 68 60 25 percent of their organizational plans or strategies fail Authenticity 68 because they are not appropriately executed or implemented. 55 Culture fit 72 We believe that strong leadership can make the difference 53 between organizational failure and success. Conceptual thinking 63 47 Navigates ambiguity 64 To test this assumption, we divided leaders into three groups— 45 weak, average, and strong—based on their ratings of the 10 Learning agility 67 43 leadership qualities. We then measured the percentage of Receptive to feedback 62 37 business strategies that were successfully executed for each Motivation 65 (propensity) to lead 37 group of leaders. 0 10 20 30 40 50 60 70 80 90 100 Importance (% critical) Skill level (% proficient) FIGURE 5: Leader Qualities: Importance and Proficiency (HR Professionals Rated Importance; Leaders Rated Proficiency)

12 Leadership Forecast 2005–2006 Results showed that strong leadership can increase the percentage of successful execution by at least 22 percentage points (see Figure 6). A Assessing Frontline Leadership Talent regression analysis revealed that 6 of the 10 leadership qualities were The move from individual contributor to leader marks a critical and especially predictive of overall execution success. These account for about challenging career transition. Some make the transition smoothly; for one-third of the variability in execution success: others, outstanding work in their functional area does not necessarily translate into success as a leader, where they are expected to motivate, > Brings out the best in people develop, and retain top talent. Obviously, for new leaders—and their > Passion for results organizations—the stakes in this transition are enormous. > Conceptual thinking New leaders need to be accountable for their own performance as well as > Learning agility drive and leverage the performance of their team. Because first-time > Motivation (propensity) to lead leaders must depend on new leadership skills they have not used > Receptivity to feedback extensively in their previous jobs, organizations often lack meaningful data with which to make the best selection decisions.

First-level leader assessment tools are an excellent way for making hiring and promotion decisions as well as assisting in the development of current and future first- and second-level leaders.

Assessment tools simulate the types of situations new leaders will actually face on the job, such as coaching others or handling conflict. Tools available from which to build an assessment program include: > Peer Interaction > Internal/External Customer Interaction > Team Member (Coaching) Interaction > Internal Partners (Managing Conflict) Interaction > In-Basket Exercise > Planning Exercise > Group Discussion Exercise

These tools not only help organizations make the right hiring and promotion decisions, but also serve as a valuable source of developmental feedback. Such simulations are now available online, making access easier and FIGURE 6: Leadership Strength and costs lower. Successful Execution of Business Strategy

13 FINDING 6 N Unfortunately, many organizations are not offering their leaders high-quality development opportunities. Only 53 percent of Only half of all leaders are Being ignorant is not so much a shame as being unwilling to learn. satisfied with their —Benjamin Franklin, Printer, the leaders we asked are satisfied with the development organization’s leadership Inventor, Philosopher, Diplomat opportunities currently available in their organization. What is worse is that this percentage has changed little from two years development opportunities. FINDING 6: Only half of all leaders are satisfied with their organization’s leadership development opportunities. ago (i.e., 54 percent satisfied). In addition, less than half of all leaders (47 percent) believe that their organization provides FINDING 7 Continued learning and development is critical to organizational them with all they need to develop. This implies that either HR professionals have seen success. Past research supports the premise that employees crucial skills are not being addressed or leaders are perceiving an improvement in the quality are more likely to stay with their organizations when they have of leader development a lack of organizational support. opportunities to learn and grow.8 It’s also hard to imagine an programs over the past four organization that does not benefit from its employees having a Although satisfaction does not vary greatly across leadership years. diverse set of skills and being willing and ready to learn as their levels, senior leaders as a group are most satisfied with their business environment changes. development offerings (57 percent). Differences across global FINDING 8 regions are more pronounced, with the United States and Formal training is the most Canada leading the way in terms of leader satisfaction with common leader development development opportunities (see Figure 7). practice, but special projects or assignments are the most effective.

FIGURE 7: Leaders’ Satisfaction with Development Opportunities—Global Comparison FIGURE 8: HR Professionals’ Ratings of Leader Development Program Quality

14 Leadership Forecast 2005–2006 FINDING 7: HR professionals have seen an improvement in the quality alternative learning technologies and support learning systems, but without of leader development programs over the past four years. replacing existing approaches, such as formal training.

Compared to previous years, HR professionals are more likely to indicate TABLE 2: USE OF LEADER DEVELOPMENT PROGRAMS that their leader development programs are of high or very high quality (see 2001 2003 2005 Moderate or Extensive Use Figure 8). Nevertheless, one-quarter (24 percent) of HR professionals 82% 77% 85% Formal workshops or training continue to believe that their leader development programs are of low or seminars (internal or external) very low quality. While HR feels that they are improving the quality of 74% 74% 77% Special projects or assignments development, their customers—leaders—do not. within one’s own job responsibilities

FINDING 8: Formal training is the most common leader development 67% 60% 65% Reading articles, books, or other reference materials practice, but special projects or assignments are the most effective. 43% 50% 52% Tests, assessments, or other Every leader has different preferences for learning and a unique learning measures of skills style. It’s important for HR professionals to accommodate these differences NA NA 48% Coaching with internal coaches by offering a range of development opportunities. The challenge they face is or mentors that many critical learning experiences often are outside of their control. For NA NA 46% Special projects or assignments outside of one’s own job example, we know that leaders gain much of their professional knowledge responsibilities by observing others and through trial and error in the workplace. 28% 42% 38% Computer-based learning (Internet/ We asked HR professionals to indicate the degree to which they made use of a CD-ROM-based self-study courses) variety of leader development programs. Table 2 shows small increases over NA NA 28% Coaching with external coaches time in the use of formal training programs, testing and assessment of leader or mentors skills, and expatriate assignments. Use of computer-based learning has 28% 18% 26% Expatriate assignments (moving to same or different roles/jobs in other leveled off somewhat, but the majority of HR professionals (i.e., 68 percent) countries) believe that the introduction of advanced learning technologies (e.g., online (NA = This approach was not measured.) learning) has improved the quality of leader development programs in their organizations. International comparisons show that Asia (73 percent) was more likely to value alternative learning technologies, while Europe (64 percent) was least likely. We expect that organizations eventually will make greater use of

15 FINDING 9 Figure 9 shows the percentage of leaders who rated each It is interesting to note that formal training, the most widely used Leaders benefit greatly from leader development activity as “highly effective.” All geographic development activity, is not deemed the most valuable. In a using mentors or personal regions and levels of leadership agree in their ranking of the top separate finding, only 51 percent of leaders indicated that coaches. three most effective development activities. Clearly, special participating in formal leadership training is an important projects within and outside of normal job responsibilities were component of their ongoing success. It might seem as though perceived as most valuable. Expatriate assignments, another HR professionals should spend the majority of their resources form of special projects, also emerged as a highly valuable on increasing the availability of special projects and learning experience. assignments; however, doing that would undercut a balanced learning and development planning approach. All the programs Special projects within one’s own 77 listed in Figure 9 have value, depending on the learner, his or job responsibilities 69 her need, and the organizational context. HR and the Special projects 46 outside of one’s own managers of leaders going through formal workshops and job responsibilities 55

26 classes might be better able to enhance the impact of this Expatriate assignments 54 training by linking it to special follow-up projects and providing

Coaching with internal 48 ongoing management support, thus providing their leaders with coaches or mentors 45 opportunities to apply newly learned skills in the workplace. 85 Formal workshops 42 FINDING 9: Leaders benefit greatly from using mentors or

Coaching with external 28 personal coaches. coaches or mentors 42 Executive coaching and other forms of leader coaching have 65 Articles/Books 27 become very popular in recent years.9 In our study 51 percent of

Tests, assessments, or 52 leaders report that they have used a personal coach or mentor. other measures of skills 26 The specialized attention of a coach provides leaders with an 38 Computer-based learning individualized diagnosis of needs, feedback, development 16 planning, one-on-one training, and tracking of results. With such 0 10 20 30 40 50 60 70 80 90 % Very Effective % Moderate or Extensive Use close attention, it’s no wonder that the leaders who have used a coach or mentor find it valuable. Most leaders with a coach or FIGURE 9: Use and Effectiveness of Leader Development Activities mentor (91 percent) find the experience provides moderate or (Leaders Rated Effectiveness; HR Professionals Rated Usage) great benefit for their careers (see Figure 10).

16 Leadership Forecast 2005–2006 The use of coaches and mentors varied globally, but not by leader level. Focus Coaching: A New Approach European leaders used coaches or mentors the least (42 percent), while leaders in the United States and Canada used them the most (55 percent). The reality is, being a leader can be overwhelming. Competing priorities. Additionally, leaders in Europe were less likely to find that mentors and Role changes. Time constraints. To keep a solid grip on this fast-paced environment, leaders need rich advice and ongoing support. Unfortunately, coaches had a positive impact on their careers (i.e., only 78 percent, few receive it. Without guidance and coaching, they often lack the focus 13 percent less than the global norm). The fact that there was no significant and integrated plan needed to effectively execute the most important work difference in coaching use or effectiveness by leadership level is surprising. priorities. As a result, personal and organizational performance suffer. Our assumption was that there would have been more prevalent use of Each leader is unique, with his or her own career interests, motivations, coaching and mentoring at higher levels. talents, and performance issues. Therefore, leaders need coaching that Typically, people are not evaluated in management roles by the way targets the specific areas in which they work and in which they have the they develop leaders. This takes a backseat to the numbers. But most influence. Rather than using a fixed approach that is applied in the same way to all individuals, we’ve found that a focused approach to people are starting to understand and value people skills more. coaching is the best answer. Coaching for success is so critical to our changing culture. If you Focus Coaching begins with a specific business situation faced by an coach for success rather than coaching for improvement, bringing in individual leader (or a team of leaders working together). For example, the numbers will be much easier. consider a leader who is taking action to turn around a struggling business —Ondrea McAulay, Manager, Performance Consulting, unit without alienating employees and losing their trust. A coach would work RCI-Cendant Corporation closely with the leader to identify and integrate key factors important to the business situation, current role demands, and the individual leader (self). Little or none Small BUSINESS 1% amount 8% Great amount 46% Moderate amount DEVELOPMENT 45% PRIORITIES

SELF ROLE

Through a holistic view of the leader’s challenges, the leader and coach can identify specific actions and development priorities that will contribute to both business and individual success. FIGURE 10: Impact of Coach or Mentor on Career Success

17 FINDING 10 FINDING 10: Less than one-half of leaders have a FINDING 11: Organizations with high-quality leader Less than one-half of leaders development plan. development programs and formal succession management programs have superior business have a development plan. Leadership development has the greatest impact when it is performance (e.g., return on equity, profit margin). targeted to specific leadership strengths and development FINDING 11 needs. Encouragingly, we found that 59 percent of leaders Many HR professionals struggle to make links between leader development programs and company performance. Our study Organizations with high- engaged in some type of formal assessment to identify their quality leader development needs and strengths. However, diagnosis alone does not examined these links using two measures of business programs and formal produce meaningful change; it needs to lead to a prescription— performance: objective and subjective. Both measures yielded succession management a sound development plan. statistically significant relationships among leadership programs have superior development quality, the presence of succession management While 60 percent of leaders meet with their managers to review business performance programs, and a range of business performance measures.10 their development progress, only 42 percent indicate that they (e.g., return on equity, have a specific plan in place. profit margin).

Mean Median Mean Median Mean Median

FIGURE 11: Industry-Adjusted Return FIGURE 12: Industry-Adjusted Profit FIGURE 13: Industry-Adjusted Operating on Equity and Leadership Development Margin and Leadership Development Cash Flow to Net Sales (OCF/NS) and Strength Index Strength Index Leadership Development Strength Index

18 Leadership Forecast 2005–2006 To begin the analyses, we created a composite leadership development In our subjective approach, we used HR professionals’ estimates of strength index based on two factors: organizational performance. They noted their organization’s performance

> Presence of a succession management program. relative to competitors in the past year. Research has found that measures > Leader development system quality (high or very high). of perceived organizational performance correlate positively with objective measures of performance.13 Figure 14 shows that the top-performing We then isolated the organizations into two groups. One group was strong organizations were significantly more likely to outperform their competition on both factors; the other had neither factor present. across a range of important outcomes. In other words, strong organizational In the objective approach, we isolated 127 U.S. and Canadian organizations leadership development predicted business performance. in our sample and found corresponding business performance data using the 2004 CompuStat® database.11 We compared these business metrics to the leadership development strength index. To ensure accuracy, all data $ • Financial Performance 19% were assessed to remove statistical outliers and were standardized by ! Succession • Productivity 20% industry. The measures used were: Management • Quality of Products/Services 15% ROE Return on Equity [ = net income/total equity] ! Strong ROA Return on Assets [ = net income/total assets] Development ! • Customer Satisfaction 10% PM Profit Margin [ = net income/net sales] • Employee Satisfaction 14% MVA/BVA Market-to-Book Ratio [ = market value of assets/total assets] OCF/NS Operating Cash Flow/Net Sales • Retention of Quality Employees 17% OCF/TA Operating Cash Flow/Total Assets Note: Numbers indicate the difference in the percentage of organizations that outperform the competition. For example, when companies have both succession management programs and Analyses revealed that the leadership index has a statistically significant strong leadership development programs, 75 percent outperform the competition in self-reported relationship to all six performance measures.12 For example, Figures 11–13 financial performance; when both programs are weak or absent, only 56 percent outperform the competition, thus accounting for the 19 percentage point difference in financial performance. demonstrate that strong leadership development programs combined with succession management are linked with higher-performing organizations. FIGURE 14: Impact of High-Quality Leader Development and Succession Management Programs on Company Performance Outcomes Clearly, leadership development offers a competitive advantage. Many organizations are setting themselves apart by investing in their leaders.

19 FINDING 12 N stabilization a “jobless recovery”—that is, one in which In the past two years, leader organizations are reluctant to add to their workforces. Leaders An ounce of loyalty is worth a pound of cleverness. turnover has decreased by —Elbert Hubbard (1856–1915), Writer, Lecturer could be waiting for the right offer before they “jump ship.” almost one-third. Cultural differences from the current study’s more international FINDING 12: In the past two years, leader turnover has sample also might be affecting turnover and loyalty ratings. decreased by almost one-third. FINDING 13 Finally, from Figure 15 we can see that turnover is higher Partly as a result of recent changes in the world economy, among first-level leaders who, as we pointed out earlier, may Current leaders are loyal and organizations that previously experienced a rising trend in face greater challenges as they make the transition from more motivated than ever to leader turnover are now seeing lower turnover rates. In the individual contributor to their new leader position. lead. past, leaders were likely to change positions or lose their jobs Turnover does vary somewhat by geographic region. Australia as organizations underwent downsizing or restructuring. With and New Zealand have some of the world’s highest turnover FINDING 14 economic conditions stabilizing in some countries, the turnover rates for first-level leaders. Mid-level leadership turnover is One in four leaders has rate for leaders has eased. Organizations are now lean enough higher in Australia, New Zealand, and Europe. Table 3 shows considered giving up a that most existing leadership positions are well justified. leadership position, mostly the average turnover rates for each geographic region. However, many leaders and organizations are still a little because of a desire to pursue uneasy about the economy, as evidenced by the fact that many personal or career goals. TABLE 3: YEARLY LEADER TURNOVER BY GEOGRAPHIC REGION leaders are staying put. Some have called the recent economic Europe U.S. & Asia Australia &

18 Canada New Zealand 16 First-level leaders 7.0 8.7 7.2 9.6 14 Mid-level leaders 7.5 6.5 6.2 7.9 12 11.6 11.4 10.3 10.2 10 10.2 Senior-level leaders 6.0 5.1 5.9 7.3 8.1 8 8.4 8.5 8.1 7.2 6.8 6 Percent turnover 5.7 4 2 0 1999 2001 2003 2005 First-level leaders Mid-level leaders Sr-level leaders

FIGURE 15: Yearly Leader Turnover

20 Leadership Forecast 2005–2006 FINDING 13: Current leaders are loyal and more motivated than FINDING 14: One in four leaders has considered giving up a leadership ever to lead. position, mostly because of a desire to pursue personal or career goals. Today’s leaders have weathered the challenges of greater performance demands, increased scrutiny, and organizational restructuring. Although While leaders seem more motivated than ever, a substantial percentage being a leader can be challenging, close to 90 percent feel a sense of loyalty wonder if their jobs are worth it. It’s easy to imagine the overstressed leader to their organizations, with those at the senior levels recording the highest with too much to do and no time for his or her personal life. But is this really degree of loyalty. the reason that leaders think about dropping out? When asked if they have ever thought about giving up their leadership positions for a non-leadership While it’s possible that the increasing complexity of leadership positions role, about one-quarter (24 percent) indicated that they had. might make such positions less desirable, our findings show that the opposite is happening. The prospect of more challenge is making What is it that makes one out of four leaders question his or her role? We leadership positions even more appealing. Our findings show that leaders found that those most likely to consider dropping out are first-level leaders like to “rise to the challenge” and are driven by a need to achieve and learn (35 percent)—those who have to make the difficult transition from individual (see Finding 27). It also is possible that recent attempts by organizations to contributor to frontline leader and who might be yearning to go back. Over retain leaders and improve their attractiveness as employers might be time, the frontline leadership role has become more stressful, with dramatic having a positive effect because when good leaders are in high demand, increases in spans of control. The percentage who are considering dropping organizations will do all they can to hold on to their top performers. out progressively decreases higher up the organizational ladder (i.e., 14 percent for senior leaders). However, those who have reached senior When asked, many leaders indicated that their motivation has increased leadership positions have already made the commitment to stay in their during the past two years. Figure 16 shows that 54 percent of leaders today leadership roles, while those with less commitment have dropped out. are more motivated to lead than before. Internationally, most regions show a Younger leaders were slightly more likely to consider dropping out. In some similar increase. However, changes in motivation to lead do not differ cases, they may be responding to the unexpected pressures of being a significantly by leader level. leader for the first time.

54% Stayed Decreased Increased the Same 12% 34%

FIGURE 16: Changes in Motivation to Lead in the Past Two Years

21 FINDING 15 We also asked leaders to tell us why they considered giving up N S Nearly half of succession their positions (see Figure 17). Their responses fell into four The best way to predict the future is to create it. plans fail to support the major categories: —Peter Drucker, Author, Management Consultant, development of future > Desire to Redirect—moving toward different career or Professor, Claremont Graduate University leaders. personal goals. FINDING 15: Nearly half of succession plans fail to support > Stress/Pressure—too much work and stress; expectations the development of future leaders. too high. FINDING 16 > Unrewarding—not satisfying or challenging; stuck in a rut. Depending on the design, succession management plans have a Promotions are more > Unqualified—don’t feel they have the skills to do the job. number of unique features and characteristics. For this reason, successful when succession we asked HR professionals to rate the strength of different plans have CEO support, The most common reason for thinking about dropping out was a qualities/characteristics in their organization’s succession involve line management, desire to redirect efforts toward other goals, either personal or management systems. Figure 18 provides a breakdown of and collect objective career-related. Perhaps, for some, the leader role turned out respondent ratings. The characteristics are grouped into four assessment data about not to be as glamorous or rewarding as once thought when general categories: organizational support, identifying candidates. compared with other options. candidates, development process, and other practices.

Want to redirect my efforts to other personal goals 30 Many of the system characteristics received low ratings, with Want to redirect my efforts 30–50 percent of HR professionals indicating that there is room to other career goals 24 Expected to do/ for improvement for most of them. Practices associated with accomplish too much 20

Not satisfying or motivating 17 leadership development received some of the weakest ratings,

Feel like I am stuck in a rut 13 with nearly half of the HR professionals seeing room for

Too much stress/pressure 10 improvement. Succession management consists of far more

Not challenging or interesting 8 than the identification and assessment of candidates. Without

Responding to challenges ongoing development, feedback, and preparation, even in my personal life 7 Don’t feel I have candidates who show high promise can fail. the required skills 6 Requires too much time or effort 6 Internationally, the strengths and weaknesses of succession 0 5 10 15 20 25 30 35 40 management programs were fairly consistent. Percent of leaders selecting the reason FIGURE 17: Reasons Leaders Consider for Giving Up Their Positions

22 Leadership Forecast 2005–2006 *Involves the CEO (or the most senior leader) 21 29 50 FINDING 16: Promotions are more successful when succession plans Is visibly supported by have CEO support, involve line management, and collect objective senior management 28 33 40 assessment data about candidates. Relies on HR staff to

T provide functional 24 46 30 R

O support and counsel P P

Simply having a succession plan in place is no guarantee that an U S

Links to business L 36 39 25 A strategy planning N organization will identify and develop the right leaders. We conducted a O I T

A *Involves line management Z I to identify and/or statistical regression to determine which system qualities were most N 35 40 25 A

G develop candidates R predictive of success rates for newly promoted leaders. Our analysis O Shares ownership/ responsibility across all 46 37 18 identified three characteristics as significant drivers of success: levels of the organization Openly shares information 52 32 16 > Involves the CEO (or the most senior leader). with candidates S

E *Collects objective

> Involves line management to identify and/or develop candidates. T 34 39 27 A assessment data D I D

> Collects objective assessment data regarding employees’ current N

A Lists well-defined C requirements and 41 36 23 performance and readiness/potential. G N

I competencies Y F I

T Considers employee N

E career wishes and 36 46 19 D If a high-potential at any level, anywhere in the world, resigns, I aspirations Uses formal training Colgate’s CEO, COO, and president are alerted within 24 hours and programs as part of 32 38 30 development move immediately to retain that person.14 S Includes developmental S

E 48 33 19

C assignments O R P

For most succession management systems, the involvement of the CEO T

N Uses university programs E as part of development 48 34 18 M and other senior leaders is critical for success. Our 1999 and 2003 studies P O L E

V Contains a time frame for consistently support senior-level involvement as a key driver for system E 42 42 16 D achieving planned actions effectiveness. Fortunately, most of the HR professionals in our sample Involves a mentoring or coaching problem 55 30 15 indicate high levels of CEO (i.e., 50 percent “strength”) and senior leader Changes in response to

(i.e., 40 percent “strength”) involvement. To ensure system effectiveness, S changing strategic 39 43 18 E C

I business plans T C senior leaders need to mentor others, scout talent, and hold others A Relies on a computerized R P

system to plan/track 66 24 10 R

E progress accountable for developing talent. Additionally, they need to facilitate the H T

O Evaluates managers process by freeing up resources and sponsoring unique opportunities for the based on their efforts 64 27 9 to develop direct reports future leaders’ development. Line managers also add to the effectiveness of 0 10 20 30 40 50 60 70 80 90 100 the succession process by identifying, monitoring, and supporting their high- Needs Improvement Acceptable Strength potential candidates. FIGURE 18: Qualities of Succession Management Programs * These items are unique and significant predictors of overall success rates.

23 FINDING 17 Identifying individuals with leadership potential is only the first Based on the three key qualities of succession plans—CEO In the future it will be step in building a strong pool of leaders. Before effective, in- support, line management involvement, and objective more difficult to fill senior depth action plans can be tailored to each individual, a assessment data—we found that success rates are much leadership positions. comprehensive assessment is needed to pinpoint specific higher—about 50 percent—when certain system qualities are success-related areas that need to be developed. These strong (see Figure 19). In other words, without a well-supported FINDING 18 objective assessments of skills confirm potential, help to target system based on objective data, organizations might as well development, and guide long-term placement decisions. use a coin toss to determine who should be promoted. One-third of all Despite the importance of this assessment step, one-third organizational FINDING 17: In the future it will be more difficult to fill (34 percent) of organizations continue to see a need to improve succession plans are senior leadership positions. ineffective, and they have the collection of objective assessment data about their leaders. Many experts agree that as the post-World War II “baby boom” not improved over the To fully maximize the impact of their succession systems, generation reaches retirement age, organizations will experience past two years. organizations need to focus on creating a thorough assessment a loss of experienced mid- and senior-level leaders. As Sen. of leader strengths and development needs, typically by using Herb Kohl (WI), a member of the Senate’s Special Committee on some form of formal assessment, such as 360-degree surveys, Aging, has stated, “With more Americans retiring and fewer FINDING 19 assessment centers, and personality testing. While about half of younger workers to replace them, companies face a labor force organizations have a shortage. . . . In the future, our economy will increasingly succession plan, there’s depend on keeping experienced employees in the workforce.”15 no evidence of increased HR professionals in our survey are seeing evidence of this trend use of such plans over as they peer into the future, especially at the senior leadership the past two years. levels. Most (66 percent) believe that it will be more difficult to find senior leaders in the future (see Figure 20). The same trend is consistent in all the geographic regions in our study.

Given the scrutiny most senior leaders are under for short-term performance and ethical behavior, it is not surprising that HR is more pessimistic about filling open positions.

FIGURE 19: Promotion Success Rates and Strength of System Quality

24 Leadership Forecast 2005–2006 FINDING 18: One-third of all organizational succession plans are experience a potential decline in competitiveness; or (3) tap into the ineffective, and they have not improved over the past two years. leadership potential of people who are already in the organization. Research consistently has shown that employees leave organizations in For many organizations the process of developing a succession plan is a large part because of the lack of developmental and growth opportunities. mystery, and they don’t do a very good job of solving the puzzle. Today, HR Organizations can address that issue by providing a strong succession professionals rate their succession management system effectiveness a 4.6 management program that creates opportunities for employees and (on a 10-point scale, with 1 = Not at all effective and 10 = Extremely effective). encourages talented individuals to rise to the top. A full one-third (34 percent) of organizations fall into the low effectiveness range (see Figure 21). In our 2003 study the average effectiveness rating for A little more than half (55 percent) of the organizations in our sample have a succession management systems was a bit higher—close to 4.8. succession plan, although they expect an increase in internally filled

FINDING 19: While about half of organizations have a succession leadership positions—a real contradiction. Succession management is plan, there’s no evidence of increased use of such plans over the critical to ensure organizations have a ready supply of leaders. It also is past two years. critical to leaders who value opportunities for growth and development. There has been virtually no change in the percentage of organizations with Organizations have three options in response to the impending shortage of succession plans in place since 2003 (54 percent). Internationally, some leaders, especially at senior levels: (1) search for hard-to-find, increasingly regions appear to be doing a better job, with Europe leading the way (see expensive people from outside the organization; (2) do nothing and Figure 22). 70 vel 66 High (8–10 rating) 60 9% 51 52 Low 50 Moderate (1–3 rating) (4–7 rating) 34% 40 57% 34 30 28 24 21 20 14 10 10

Percent of HR professionals selecting ease/difficulty le 0 First-level leaders Mid-level leaders Senior-level leaders FIGURE 21: Succession Management % Easier % About the same % More difficult System Effectiveness

FIGURE 20: Future Difficulty in Finding Leaders

25 FINDING 20 professionals foresee an increase in the number of leadership We have a long track record of making significant Organizations predict an positions filled by internal candidates. Although the increase is investment in senior- and mid-level leaders. Long-term increase in their use of not as strong as in past years,16 the trend toward internal success depends upon preparing our leaders. We’ve been internal promotions to fill promotions continues. The same pattern of increased internal doing this through the development of competencies and leadership positions. sourcing appears consistently around the world, with the multirater assessment. greatest increases in Asia (43 percent). —Joseph Nicosia, Chief Learning Officer, FINDING 21 Kettering Medical Center Network The value of internally sourced leaders has been established in While organizations are previous studies, such as a 2005 study of CEOs conducted by focusing succession FINDING 20: Organizations predict an increase in their use Booz Allen Hamilton.17 That study reported that CEOs planning on higher levels of internal promotions to fill leadership positions. appointed internally tend to outperform those appointed from of leadership, one in four outside the organization. Globally, over a seven-year period, While organizations are considering several new, creative ways organizations covers internally appointed CEOs delivered shareholder returns that to fill senior leader positions, many are looking within their own frontline leadership positions were 1.9 percentage points higher per year than those ranks to identify future leaders and see that approach with succession plans. delivered by outsiders. It’s likely that the same advantages of continuing. A little more than one-third (37 percent) of HR internal CEO appointments translate to other leadership levels.

FINDING 22 FINDING 21: While organizations are focusing succession Between one-quarter and planning on higher levels of leadership, one in four one-half of leaders at all organizations covers frontline leadership positions with levels think too much is succession plans. expected of senior leaders Succession management is often thought of only in terms of today. This finding varies greatly by region. senior positions. Of course, senior positions offer the highest risk and organizations should be devoting a lot of attention to filling them with the best leaders. Figure 23 supports this conclusion by showing that many more high-level leaders than low-level leaders are supported by a succession plan. Over the past several years, the focus on senior-level leaders’ succession management has FIGURE 22: Prevalence of Organizational increased by an encouraging 9 percent. Succession Plans

26 Leadership Forecast 2005–2006 Despite the focus on senior-level leaders, organizations are beginning to SSS N S cover lower-level leadership positions with succession plans, realizing that Nothing endures but change. building a leadership pipeline is essential at all levels. Overall, we found that —Heraclitus, Greek philosopher (6th century B.C.E.) 28 percent of all leaders in organizations (regardless of level) are supported Today’s leaders have higher expectations placed upon them while being by a succession management plan. This percentage is higher in Europe forced to do more with fewer resources. They face a complex, changing (34 percent). Interestingly, the percentage of positions covered is lower than business landscape that requires them to be more adaptive, connected, and it was in our 2003 study (i.e., 35 percent). informed than ever before. In our 2003–2004 Leadership Forecast, we With the challenge of facing a talent shortage . . . how we manage revealed that the expectations for leadership excellence have been raised our talent from succession planning to internally developing bench and that fewer leaders are considered “strong” in the skills required for strength has never been so important for our organization. success. Now, we must ask: Is that still true today? —Patrick Murphy, Executive Vice President, Human Resources, Webster Financial Corporation FINDING 22: Between one-quarter and one-half of leaders at all levels think too much is expected of senior leaders today. This finding varies greatly by region. 15 Individual contributors Leadership is a difficult job, requiring a diverse set of skills and abilities. But (professionals, frontline) 9 has it become too demanding? Senior leaders, in particular, experience a First-level functional 24 supervisors (e.g., team leader) 20 high level of public scrutiny, with even the smallest mistakes open to criticism. In some cases these criticisms can be extreme, with leaders held up to an Department, function, 38 or project managers 39 unreasonable standard of perfection. At the same time, recent high-profile ethical and accounting missteps and unmet performance expectations have Multi-department or 46 function managers 48 resulted in more public scrutiny of the actions of senior-level leaders. Some

Top-level managers 48 commentators claim that the balance of power in organizations is shifting (CEO, CFO, COO) 39 from the senior leaders to the directors, auditors, and lawyers.18 One study

19 0 10 20 30 40 50 60 70 80 by Booz Allen Hamilton (2005) pointed out that the pressures on CEOs Percent of organizations indicating the have become especially strong in Europe and Asia (excluding Japan). These position is covered by succession plans geographic regions have the highest turnover, the most firings, the shortest 2003 2005 tenures, and the greatest increases in turnover rates. FIGURE 23: Job Positions Covered by Succession Plans

27 FINDING 23 We asked both leaders and HR professionals if they thought FINDING 23: Leaders are most concerned with customer Leaders are most concerned that people are expecting too much of senior leaders today in relationships, cost control, leveraging talent, and quality. with customer relationships, terms of personal attributes, skills, and expertise. Nearly half Senior leaders, however, are focused on growth and cost control, leveraging of leaders (45 percent) and about two-fifths (38 percent) of employee talent. talent, and quality. Senior HR professionals agreed or strongly agreed (see Figures 24 We asked leaders to identify the most important business leaders, however, are and 25). priorities demanding their attention. These 14 priorities can be focused on growth and Interestingly, senior leaders are no more likely than first- or grouped into four categories (see Figure 26). The most employee talent. mid-level leaders to say that expectations for senior leaders are pressing priorities related to improving customer relationships, too high. While different levels of leadership have similar managing costs, leveraging talent, and improving quality. The FINDING 24 perceptions, more dramatic differences appear internationally. top five leader priorities did not vary internationally, but priorities Compared to six years ago, Leaders in Asia are much more likely to believe that did shift depending on the level of leadership (see Table 4). about 20 percent more expectations are too high (72 percent). In the United States The good news is that senior-level leaders are more likely to leaders are focused on and Canada, Europe, and Australia and New Zealand, leaders emphasize improving or leveraging talent. Next in ranking by talent management and are much less likely to think that expectations of leaders are too senior leaders is growth, a make or break proposition for most cost control. high (22, 27, and 28 percent, respectively). senior leaders. In most cases, senior leaders, who are responsible for the organization’s overall financial success,

Strongly Strongly maintain a high-level view of the organization. In contrast, agree agree 10% 8% lower-level leaders tend to focus on daily operations, which is Agree Strongly Agree Strongly 35% disagree 30% disagree confirmed by their relatively higher levels of attention to quality 11% 10% and customers.

Disagree Disagree TABLE 4: RANKED LEADER PRIORITIES (BY LEVEL) 45% 51% Level First Mid Higher Senior 1 3 4 6 Identify ways to improve quality 2 1 1 4 Improve customer relationships/service FIGURE 24: Are We Expecting FIGURE 25: Are We Expecting 3 2 3 3 Control costs Too Much of Senior Leaders? Too Much of Senior Leaders? 4 4 2 1 Improve or leverage talent (Leader Ratings) (HR Ratings) 5 5 5 7 Improve technology/operating efficiency 6 6 6 2 Growth (increase revenue/sales) 7 7 7 5 Improve company culture

28 Leadership Forecast 2005–2006 FINDING 24: Compared to six years ago, about 20 percent more leaders are focused on talent management and cost control. Y

C Identify ways to 66 N 70 E I improve quality 70 C I F

F Because all business priorities are interrelated, no single priority is equally E

Improve new technology 61 D 62

N and/or operating A

61 important in all organizations. For example, some organizations rely on

Y efficiency T I L

A Develop new technology 43 U 46 mergers and acquisitions to maximize their growth and acquire new Q and/or processes (innovation) 47 67 technology or capabilities. Other organizations grow through rapid H T Control costs 72 G

N 52

E expansion and a strong research and development program. Still, the R T

S 69 Improve customer T 70 E business landscape is different from the situation we saw in our 2001 report. K relationships/service 65 R A M 58 Both leveraging talent and controlling costs are now more important than in D Growth (increase

N 53 A revenue/sales) 55 L A

I recent years. About 20 percent more leaders emphasize the importance of C

N 44

A Improve market image

N 41 I

F or reputation 41 talent management and cost controls as significant priorities.

Y Improve or leverage 66 G 68 E

T talent Talent management encompasses the entire work cycle for employees,

A 44 R T S 54

D Improve company including how they are selected, developed, and deployed. In addition,

N 50

A culture 51 E R

U recent developments in the area of employee engagement have highlighted T

L Define a clear or new 35 U 32 C company strategy 41

G the need to tap into the full potential of employee talent and productivity. N I D

L 38 I Build new company U 30 Fortunately, many organizations are beginning to realize that managing B capabilities 36

26 employee talent is a real business priority for leaders. Talent has become Enter new markets 23 27

N perhaps the only real differentiator for organizations seeking a competitive O I

S 14

N Expand or strengthen

A 15 advantage. P international presence

X 15 E Manage new 10 acquisitions 9 World economic events since 2000 have made cost control a much larger or mergers 9 0 10 20 30 40 50 60 70 80 priority as well. Since reporting our 1999–2000 findings, we have found that Percent selecting the priority organizations are paying much more attention to cost control. Despite slow, 2001 2003 2005 recent growth, many companies are still cautious about what really adds value in the way of investment. FIGURE 26: Leader Business Priorities

29 FINDING 25 United States and Canada, where the conflicting pressures of We’re getting people ready to step up. For us, talent Three out of ten leaders have work and family life are felt more strongly. management results in putting the right person in the problems with work/life FINDING 26: Work/Life imbalance translates to higher right job at the right time so that it meets our balance. turnover and, therefore, higher costs. organization’s need as well as our employees’ personal and professional needs. This is a critical component of Work/Life balance matters for leaders and organizations FINDING 26 our organization’s success. because it translates directly into better retention. We Work/Life imbalance —Ondrea McAulay, Manager, Performance Consulting, compared organizations with lower work/life balance to those translates to higher turnover RCI-Cendant Corporation with a higher level of balance. Results showed that the and, therefore, higher costs. organizations with the best balance had a .5 to 1 percentage FINDING 25: Three out of ten leaders have problems with point lower turnover rate at all levels of leadership. One of our work/life balance. past studies has shown that a 1 percent reduction in turnover in FINDING 27 an organization with 10,000 employees can equate to an Personal ambition and need The average leader works 51 hours per week. When one adds annual savings of $366,000.20 for achievement drive many the pressures of a family and other personal obligations to that leaders to work/life weekly schedule, it’s easy to see why leaders can become imbalance. overwhelmed while trying to balance all their obligations. Some leaders can manage these pressures; but at least three in ten (30 percent) are finding it much tougher to strike a balance. We have also found that senior leaders and first-level leaders are slightly more likely to enjoy a work/life balance than mid- or upper-level leaders—those caught in the middle.

The ability to balance work and a personal life is notably different across international boundaries. Figure 27 shows that leaders in the United States and Canada indicate the lowest level of having a work/life balance. However, the number of hours worked per week varies only a small amount, with Asian leaders working only about 1–2 hours more a week. This discrepancy could be FIGURE 27: Work/Life Balance by explained by the larger percentage of dual-income families in the Geographic Region

30 Leadership Forecast 2005–2006 FINDING 27: Personal ambition and need for achievement drive many the hours and times they must work, and thus, they perceive less balance. leaders to work/life imbalance. Health care workers’ imbalance may be a function of a turbulent, high-stress industry. Of the leaders who do not have a good work/life balance, 72 percent indicate that their problems stem from the excessive amount of work they are expected One may argue that overburdened leaders need to work smarter, not harder, to handle (see Figure 28). Less than half of all those we surveyed— by leveraging their resources and their employees’ talents. At the same 39 percent—say that they have control over their work/life balance. True, time, leaders recognize that their own ambitions and drive for achievement some leaders are overloaded with work and have little control over how much can contribute to their problems with work/life balance. While some leaders they are able to do. Also, leaders reporting poor work/life balance work an have objective reasons for keeping their positions, many actively choose to average of six hours more per week than leaders reporting a good balance. be leaders and are willing to accept the resulting work/life imbalance. Of the At the same time, certain positions and industries thrive on a fast-paced work leaders who have poor work/life balance, 60 percent are willing to give up environment where leaders are expected to manage many projects and even more personal time if it means that they can reach higher levels of responsibilities. When examining differences by work function, health care leadership. Perhaps more strikingly, 76 percent of leaders with good and sales employees were least likely to claim a good work/life balance (58 balance are willing to give up more personal time if it means that they can and 64 percent, respectively). Often, sales associates have less control over advance.

Clearly, many leaders are driven to succeed, and they take personal

Amount of work I am satisfaction from advancing their careers. Indeed, 80 percent of the leaders expected to handle 72 in our sample are satisfied with their jobs and are proud of being leaders. Internal drive for achievement 67 When comparing leaders who have good balance to those who do not, the Nature of industry leaders with imbalance are significantly less satisfied with their jobs and or business 49 Own ambition to succeed leadership positions. Additionally, they are significantly more likely to or promote my career 49 consider leaving both their leadership positions and their organizations. My manager/supervisor expects me to 22 However, work/life balance does not affect overall pride in one’s leadership Team/Staff/Support people not contributing 20 position. as much as they should Inefficient or have trouble managing time 18

0 10 20 30 40 50 60 70 80 Percent of leaders selecting the reason

FIGURE 28: Drivers of Work/Life Imbalance

31 FINDING 28: Although work/life balance drives Nonexistent FINDING 28 17% Although work/life balance retention, only one in four organizations actively promotes this balance. drives retention, only one in Proactive 24% four organizations actively Evidently, work/life balance, at least at the leadership level, promotes this balance. Reactive seems to be of little concern to most organizations. In our 59% experience it is far more likely to see a culture that rewards FINDING 29 imbalance instead of balance. When asked about their Three-quarters of leaders response to the challenges of maintaining leaders’ work/life balance, most organizations (59 percent) indicated a reactive want to be promoted, mostly FIGURE 29: Organizations’ Responses because they want to stance (see Figure 29). Few organizations (about 24 percent) to Work/Life Balance Issue broaden their skills and make proactively address issues of work/life balance before they an even greater contribution surface. These proactive approaches to work/life balance are to the company. most common in Australia and New Zealand (33 percent) and 10 are least common in Europe (18 percent). 9 8 Taking a proactive stance to work/life balance can have a 7 significant impact on leader turnover (see Figure 30). When 6 we compared organizations with proactive and reactive

Percent turnover 5 approaches to work/life balance, we found a two percentage 4 point difference in overall turnover. Our results show that 3

leaders sometimes leave their organizations because of work Nonexistent Reactive Proactive issues that increase work/life imbalance. The benefit of Approach to work/life balance addressing these issues by actively managing the problem can First-level leaders Mid-level leaders Sr-level leaders lead to significant savings from reduced turnover. FIGURE 30: Impact of Work/Life Balance Approach on Leader Turnover

32 Leadership Forecast 2005–2006 In our study, about three in four leaders expressed at least a moderate desire to be promoted into higher-level positions. In one sense this is good High achievement always takes place in the framework of high expectation. —Charles Kettering, Inventor, Philanthropist news. The majority of leaders still possess the passion and drive for further promotions; however, only 39 percent fall into the “highly ambitious” FINDING 29: Three-quarters of leaders want to be promoted, mostly category and 8 percent have absolutely no desire to climb the corporate because they want to broaden their skills and make an even greater ladder. One could argue that the percentage of leaders with high ambition is contribution to the company. plenty sufficient to fill future openings. However, we must keep in mind, Many first-time leaders have high ambition and want to climb the corporate ambition is not equivalent to ability to perform at higher levels. Our ladder. In some cases they are driven by ambition, but many indicate that experience would indicate that a fair number of the truly ambitious might not their drive to lead is fueled by a desire to grow and contribute to the necessarily have the potential to assume senior positions. This could result organization. We found that a little more than three-quarters (77 percent) of in an insufficient supply of likely senior-level candidates. leaders want to be promoted to higher levels of leadership. When asked Leaders are, in our opinion, expressing the right reasons for wanting to about their motivations for advancement, by far the most common reasons move up the corporate ladder. As shown in Figure 31, the major reasons for were the desire to grow and to make a greater contribution to the company advancement are associated with making a contribution and learning, not (see Figure 31). salary or the desire for power.

Desire to broaden your skills or improve yourself 72 We did not find support for the belief that younger leaders are less motivated to Desire to make a lead. In fact, our analysis shows that younger workers actually have a greater greater contribution 70 to the company desire to be promoted. This is true even when statistically controlling for the Greater compensation 51 fact that older workers have already attained higher levels of leadership. We do Status and recognition 31 not know if motivation levels have changed compared to previous generations, Increase your marketability for other 20 jobs in other companies but it is clear that younger workers aspire to higher leadership positions. Desire for power 13 and influence Findings about leaders’ motivation to be promoted point to the critical need for Other 5 organizations to nurture leaders and provide them with opportunities to expand

0 10 20 30 40 50 60 70 80 their skills. DDI’s Selection Forecast (2005) reported that most employees Percent of leaders selecting the reason leave the organization for better development opportunities. Organizations FIGURE 31: Leaders’ Motivations for Promotion that fail to meet this challenge will lose their most valuable asset: leaders who want to improve themselves and give more value to the organization.

33 FINDING 30 FINDING 30: Most leaders arrived in their positions by some cases the promotion to a leadership position was a Most leaders arrived in their working their way up the ladder, though other routes are reward for taking a risk that paid off. positions by working their possible. > Groomed—These leaders were identified early in their way up the ladder, though Although there is no shortage of individuals who claim to be careers and were groomed for their positions by a mentor or other routes are possible. experts on the nature of leadership, there is surprisingly little by use of a special program. agreement about the origin of leaders. Some believe that > Self-made—These leaders worked their way up the ranks, FINDING 31 leaders are born, while others hold that leaders are the product building their successes along the way. As a group, they tend to lack special educational backgrounds, causing them to rely Leaders learn the most of their circumstances or in-depth development activities. In our on their experiences to get ahead (i.e., inverse relationship by observing others and study, most leaders believe that leadership is an acquired skill. through trial and error. When asked about their skill level when they first took on a with education). leadership position, 64 percent indicated that they had to Others see me as a develop their leadership skills. leader and nominate me 41

Always seen as a leader 38 We asked leaders how they arrived in their leadership positions. Born to lead Rewarded for contributions Results of a statistical cluster analysis revealed four primary as an individual contributor 38 Took a big risk, performed paths to leadership. While these paths are not mutually well, and was given 22 a leadership position Rewarded for success exclusive, they do illustrate that the road to leadership can be Groomed to be a leader by a mentor 15 driven by a mix of experiences and influences. The most Groomed to be a leader by a program 13 common path was to work up the ladder (i.e., self-made). The within an organization Groomed Worked my way up, building second most common path entailed being seen by others as a leadership skills along the way 68 leader from the outset. Figure 32 shows the prevalence of Given a leadership position as a result 19 of education Self-made each of these factors: Lucky enough to be in the right place at the right time 23 > Born to lead—These people have always been seen by Other 3 others as leaders, and others usually nominate them to Other leadership positions. For these individuals, leadership comes 0 10 20 30 40 50 60 70 80 Percent of leaders selecting the reason naturally. FIGURE 32: Origin of Leaders > Rewarded for success—These individuals received leadership positions as a reward or as recognition for their expertise. In

34 Leadership Forecast 2005–2006 The critical task facing organizations is to make sure that leaders have On the other hand, sources such as mentoring and on-the-job training are access to the right developmental experiences to ensure that individuals with lower on this list even though our previous finding (see Finding 8) showed real potential to lead have the chance to learn and grow. Organizations that these two methods to be largely effective. Higher-quality mentoring simply let leaders “bubble to the top” are missing out on those who might not programs and putting more structure around on-the-job learning may have the opportunity or patience to work their way up through the ranks. It influence the future effectiveness of these sources. can be more effective to identify high-potential individuals early on and accelerate their learning paths, thus reducing the time to full contribution of Observing others 68 their talents and abilities and maximizing retention. Unfortunately, few Trial and error on the job 67 leaders have participated in organized grooming programs that rely on My current manager/supervisor 58 organizational resources and mentors to prepare them for their positions. Reading 56

FINDING 31: Leaders learn the most by observing others and through Coworkers and peers at my company 54 trial and error. Formal training experience 53 Most leaders indicate that they achieved their current positions by working Other managers/supervisors at my company 51 their way up the ladder, building skills along the way. Did those leaders Formal educational experiences (e.g., university) 49 participate in training? Did they take on special projects? Did they read Formal on-the-job training 47 books? The answer to all these questions is a qualified yes. Leaders learn Managers/Supervisors in other companies where 46 in a lot of different ways; there are many paths to knowledge and skill I previously worked Professional colleagues development, depending on the individual. at other organizations 36 Participating in professional 30 Although formal organizational systems are important for developing organizations or associations Formal one-on-one leaders, we were interested to find out how leaders acquired their skills and coaches or mentors 27 Coworkers and peers in knowledge. We asked leaders to indicate which sources had the most other companies where 27 I previously worked influence on their ability to achieve their current level of skills and Family and friends 26 knowledge. These sources covered a broad range of influences, not just the Internet or online resources 14 programs most likely to be offered by organizations. Figure 33 shows that, 0 10 20 30 40 50 60 70 80 by far, “observing others” and “trial and error on the job” are most influential. Percent of leaders selecting the reason FIGURE 33: Leaders’ Learning Sources

35 NSNS N Getting Started as a New Leader NNS It’s an exciting day in the workplace when someone is Align leader success profiles with business needs— rewarded for his or her performance with a promotion to the Development programs are most valuable when they develop leadership ranks. In an ideal world, the stellar individual leaders in a way that helps the organization address its contributor is magically transformed into a successful frontline business needs. To do this, organizations should focus their leader. HR programs on leader success profiles (e.g., competency Unfortunately, that is not how the story typically unfolds. New models) that support the business model. For example, if the leaders must acquire the knowledge and skills they need to business strategy emphasizes creativity and innovation, leader overcome the challenges associated with getting their footing in their new leadership role. This learning process works best success profiles should include behaviors that promote high when new leaders use a structured approach of training and employee involvement. assessment that will accelerate their ability to achieve results Accurately diagnose leader skills—After defining leader through others. Leaders’ transition plans should include: success profiles, organizations need to objectively measure > Creating a personal strategy for moving quickly into the new leadership capacity. Doing so will produce an assessment of leadership role. organizational and individual strengths and development needs. > Maintaining or building successful working relationships with team members, including former peers. Methods such as 360-degree assessments, roleplays, and > Aligning team efforts to ensure that they support the in-basket exercises provide a wealth of information for organization’s business strategies. development. Advances in technology allow organizations to > Using a set of tools and resources to determine priorities for assess leaders online and through validated personality themselves and their teams. assessments. > Assessing strengths and growth areas for each team member as well as themselves. Base selection and promotion decisions on skills and motivation to lead—Many decisions to promote individual New leaders emerge from this process with the knowledge and insights they need to achieve results quickly, build positive contributors into leadership positions are based on the relationships with their teams, lead their teams to contribute to contributor’s performance. Past performance is a good organizational goals and objectives, and focus their time and predictor of future performance; however, often individuals efforts on high-priority tasks and activities. promoted into leadership roles face a different set of job demands for which their past performance is not a reliable

36 Leadership Forecast 2005–2006 predictor of future success. For internal promotions to succeed, mentoring to be very valuable. Clearly, coaches and mentors have a critical organizations need to assess skills relative to the job in question. role to play in the development of leaders. Additionally, an assessment of the candidate’s personality and motivation to Include “learning by doing” options in a mix of development lead can help the organization understand if the person will be successful in offerings—In the past, designing and implementing corporate development his or her new role. programs was a fairly straightforward endeavor. Today, leader development Identify leader potential early on—The demand for strategic leaders is has moved away from traditional training programs to ones that take the rapidly outgrowing the supply, meaning organizations must identify and learner out of the work environment. The most effective development efforts invest in people with the greatest potential for growth as strategic leaders. now include real-life experiences and targeted coaching from mentors, Few organizations are doing this effectively. An organization needs an where learners can receive immediate feedback when trying out new effective identification process that focuses on the hard-to-acquire skills, approaches and skills in the workplace. traits, and abilities that characterize people who will grow into strategic leaders capable of driving business performance.

Win the support of senior management—Successful HR programs are linked to the organization’s business strategy and, in doing so, gain the support of senior-level management. Many organizations have come to realize that their leaders provide a competitive advantage. Our results show that retaining talent is one of the key concerns facing senior leaders today. When senior management is involved in the development of the organization’s leaders, those leaders feel valued and the development program receives an extra boost of energy.

Ramp up the role of coaches and mentors—The rapidly changing challenges confronting leaders today are more numerous, varied, and complex than ever before. The impact of these forces on the lives of leaders and their ability to succeed in their roles has been dramatic. Thus, the growing need for coaches and mentors who can provide the kind of individualized direction that will help leaders identify their needs, focus their behavior, and overcome obstacles. Leaders in our study find coaching and

37 NNS 8. Selection Forecast: Recruiting and Hiring Talent 14. Cited in “Ending the CEO Succession Crisis,” by (p. 14), by P.R. Bernthal and S. Erker, 2005, R. Charan, February 2005, Harvard Business 1. “A Dearth of Good Managers,” by M.A. Verespej, Pittsburgh, PA: Development Dimensions Review, p. 81. 2001, IndustryWeek, 250, pp. 35–36. International. 15. Cited in “Wanted: Retirees to Work: Employers Try 2. Cited in “The Aging Workforce Raises New 9. For example: The Mentor’s Guide: Facilitating to Prepare for Pending Exodus of Boomers,” by C. Talent Management Issues for Employers,” by Effective Learning Relationships, by L.J. Zachary, Said, April 29, 2005, San Francisco Chronicle. A. Rappaport, E. Bancroft, and L. Okum, 2003, 2000, San Francisco: Jossey-Bass. Available online at http://www.sfgate.com/ Journal of Organizational Excellence, 23, cgi-bin/article.cgi?f=/c/a/ 2005/04/29/ pp. 55–56. 10. In October or November of 2005, DDI will release BUGO7CH2691.DTL a more detailed summary of the objective 3. www.accesseconomics.com.au: Access analysis using the Compustat® database. 16. In DDI’s 2001 Leadership Forecast study, the Economics offers independent, credible, high- percentage of organizations indicating an quality advisory and forecasting services in the 11. www.compustat.com: For more than 43 years, ® increase in the use of internal promotions was areas of economic policy and investments. Standard & Poor’s Compustat database has 44 percent; however, continued increases over delivered high-quality, standardized fundamental 4. “All in It Together,” a paper prepared by Access time will eventually lead to stabilization in the and market data to investment professionals Economics for the Department of Health and use of internal promotions. worldwide. Ageing, Canberra, June 2000, p. 1. 17. “CEO Succession: The World’s Most Prominent 12. All statistical tests of significance used the 5. CEO Challenge 2004: Perspectives and Analysis Temp Workers,” by C. Lucier, R. Schuyt, and p-value of .10, which is the commonly accepted (pp. 6–9), by E.V. Rudis, 2004, New York: The E. Tse, Summer 2005, strategy+business, standard for analyses of this type. All analyses Conference Board. pp. 38–43. reach a p-value of .06 or less. 6. “Top U.S. Companies for Leaders Announced,” 18. “The Boss on the Sidelines: How Auditors, 13. “Interorganizational and Collective Strategies in a Hewitt press release, April 2005. Available at Directors, and Lawyers Are Asserting Their Small Firms: Environmental Effects and www.hewitt.com. Power,” by D. Henry, M. France, and L. Lavelle, Performance,” by M.J. Dollinger and P.A. Golden, April 25, 2005, Business Week, pp. 86–96. 7. The Leading Edge: Leadership Potential from 1992, Journal of Management, 18, pp. 695–715. the Classroom to the Boardroom, a DDI 19. Lucier, et al, pp. 38–43. “Organizational Alignment as a Competitive Research Report, January 2005, London: Advantage,” by T.C. Powell, 1992, Strategic 20. Bernthal and Erker, p. 19. Development Dimensions International. Management Journal, 13, pp. 119–134.

38 Leadership Forecast 2005–2006 S ORGANIZATIONAL N = 944

Public or Private Business Classification (Multiple Selections Possible) 42% Public 3% Aerospace & Defense 5% Government 58% Private 1% Agriculture 10% Health Care—Products & Services 6% Automotive & Transport 7% Industrial Manufacturing Leasing/Manufacturing 3% Insurance 5% Banking 3% Leisure Number of Employees in the Entire 2% Beverages Organization 2% Media 8% Business Services 2% 1–10 0% Membership Organizations 4% Chemicals 3% 11–50 1% Metals & Mining 3% Computer Hardware 3% 51–100 5% Pharmaceuticals 3% Computer Services 5% 101–200 2% Real Estate—Commercial 2% Computer Software—Development & Residential 12% 201–500 & Sales 5% Retail 11% 501–1,000 3% Construction—Services & Materials 1% Security Products & Services 28% 1,001–5,000 4% Consumer Products Manufacturers 3% Telecommunications—Equipment 11% 5,001–10,000 2% Consumer Services & Services 6% 10,001–20,000 0% Cultural Institutions 5% Transportation Services 8% 20,001–50,000 5% Education 9% 50,001 or more 4% Electronics

5% Energy & Utilities Presence in the Global Market 1% Environmental Services & Equipment 42% National company—We do not own, 5% Financial Services operate, or have affiliate offices outside 3% Food our country. 1% Foundations & Charitable 58% Multinational company—We own, Organizations operate, or have affiliate offices outside our country.

Note: Numbers may not add up to 100 percent because of rounding.

39 Participating Countries LEADER DEMOGRAPHICS N = 4,561 Organizational Tenure

Australia New Zealand 4% Less than 6 months Austria Norway Age 5% 6–11 months 1% 18–25 12% 1–2 years Belgium Pakistan 17% 26–35 22% 3–5 years Bolivia Peru 43% 36–45 20% 6–10 years Botswana Philippines 31% 46–55 13% 11–15 years Canada Puerto Rico 7% 56–65 26% More than 15 years China Romania 0% More than 65 Colombia Saudi Arabia Functional Area Costa Rica Singapore 10% Accounting/Finance Czech Republic South Africa Leadership/Management Level 3% Administrative/Clerical Dominican Republic Switzerland 17% First-level leader—Supervisor, team 6% Customer Service and Support Dubai Taiwan leader, foreman, etc. 1% Distribution France Thailand 38% Mid-level leader—Leader of first-level 5% Engineering leaders (group managers, district Germany Turkey 5% Health Care Provider (MD, nurse, EMT, etc.) managers, etc.) Guam United Arab Emirates 7% Human Resources/Personnel 34% Higher-level leader—Leader/Manager Hong Kong United Kingdom of mid-level leaders (director, department 7% Information Systems India United States head, vice president, etc.) 1% Maintenance/Facilities of America Indonesia 10% Senior-level leader—Executives and 5% Manufacturing/Production/General Labor those in policy-making positions (CEO, Ireland 7% Marketing COO, CFO, executive VP, senior VP, Japan plant manager, etc.) 13% Operations Luxembourg 0% Publications/Graphic Design Malaysia 2% Purchasing 2% Quality Assurance Mexico 4% Research/Development Morocco 7% Sales The Netherlands 15% Other

40 Leadership Forecast 2005–2006 N NNS

All Organizations Listed Completed the HR Survey BellSouth Corporation City of Dallas ‡ = Leader Survey Bemis Manufacturing Company City of Kalamazoo The Benchmark Partners City of Scottsdale UNITED STATES & CANADA Bennett Management Corp. Classic Residence by Hyatt Accredo Nova Factor, Inc. Beverly Enterprises, Inc. CN Administaff, Inc. Bison Building Materials, Ltd. ‡ Colorado Springs Utilities Adobe Systems Incorporated Bloomington Hospital ‡ Colwell North America Advanced Solutions International, Inc. BMC Software, Inc. Communications Data Services, Inc. Advantis Technologies, Inc. The Boldt Company Community Provider of Enrichment Services Advocate Health Centers Bourse de Montréal Inc. Community Resources for Independence, Inc. AEGON Direct Marketing Services, Inc. Breads of the World LLC CompUSA Management Company After Hours Pediatrics Bridgestone Americas Holding, Inc. Constituency Management Group AGL Resources Inc. Bridgestone Firestone Con-Way AgriBank, FCB ‡ Brink’s, Incorporated ‡ Cooks Collision Agriculture and Agri-Food Canada Broadwing Communications LLC Cox Communications, Inc. AIMCO Brown Shoe Company, Inc. ‡ CPS Printing Air Liquide America L.P. Bryant & Stratton College CRAIG/is Ltd. ‡ Air Liquide Canada Inc. ‡ Bunn-O-Matic Corporation Creekwood Surgery Center Alcoa Inc. Butte Public Schools Cricket Communications Alliance Data Systems—Utility Services The C.A. Lawton Company D.D. Williamson Alliance Water Resources, Inc. California Teachers Association DaimlerChrysler Services AMD The Callos Companies Dallas Area Rapid Transit ‡ American Electric Power Company, Inc. Cardinal Health System, Inc. Dallas Fort Worth Airport Board American Heart Association, Inc. CARE USA Daytona Beach Community College American University Caremark Inc. ‡ DBM, Inc. Amerisure Insurance Company CEMEX USA, Inc. Deaconess Hospital AMETEK, Inc. Centene Corporation Delaware Children’s Department Apotex CenterPoint Energy Inc. DENSO Manufacturing Tennessee, Inc. ARINC Incorporated ‡ Centex Rodgers, Inc. Department of Human Services Arkansas Blue Cross Blue Shield Central Florida Regional Hospital ‡ Detachment 1, 607 WS Atlantic Packaging LTD ChevronTexaco Detroit Diesel Corporation Bank of America Corporation Children’s Hospital Central California DHL BDC Childrens Hospital Los Angeles ‡ Doherty Employment Group Behr Industries Corporation ‡ Cincinnati Children’s Hospital Medical Center Donaldson Company, Inc. Bell Helicopter Textron Inc. Cinergy Corp. Douglas County Government ‡

41 DRS Technologies, Inc. Great Lakes Energy ‡ Laclede Gas Company DST Output Guidant Lake Forest Graduate School of Management DST Systems Inc. Harcourt, Inc. Lake Region Medical, Inc. Dunlop Sports Group Harris County Lake Tahoe Unified School District E&A Consulting Group, Inc. ‡ The Hartford Financial Services Group, Inc. Leadership Unlimited of Penn State Erie— Easter Seals Southern California Health Network Laboratories The Behrend College Eaton Corporation, Electrical Group Heart Hospital of Austin/New Mexico Level 3 Communications, Inc. Eckerd Corporation Heart Hospital of New Mexico Lewis-Gale Medical Center/HCA ‡ Edward Hospital & Health Services Hercules Incorporated Limited Brands, Inc. EMPO Heritage Valley Health System Lockheed Martin Corporation Enterprise Bank & Trust ‡ Hershey Foods Corporation Lofton Staffing Services Erie Insurance Group Hewitt Équipement Limitée Lord Corporation ESCO Corp. Hospira, Inc. Lumenis Esselte Corporation Howmet Castings, an Alcoa Business Lyondell Chemical Company Excell Services ICOM Information & Communications Inc. Magee-Womens Hospital of University The Family Place IHS Energy of Pittsburgh Medical Center Federal Reserve Bank of Cleveland Ingram Micro Latin America Division Magid Glove and Safety Manufacturing Company LLC Federal Reserve Bank of Dallas INTEGRIS Health, Inc. ‡ Magnum Hunter Resources, Inc. Fédération des Caisses populaires Interstate Brands Manhattan Associates, Inc. ‡ Desjardins du Québec INTRIA Items Inc. Massachusetts Eye and Ear Infirmary First Coast Service Options, Inc. Jackson National Life Insurance Company Massachusetts Institute of Technology First National Bank Jackson Products Inc. MATC Fitzpatrick, Bongiovanni & Kelly, PC JCPenney Matsushita Avionics Systems Florida Coca-Cola Bottling Company John Deere McDonald’s Corporation Franklin Templeton Investments John Rhea Barton Surgical Associates McKee Foods Corporation and Affiliates Frito-Lay Canada ‡ Johnston Memorial Hospital McKesson Corporation G&K Services Canada Inc. Kent Seventh-day Adventist Church MeadWestvaco G&K Services, Inc. Kettering Medical Center Network ‡ Mecklenburg County Government Gabberts Furniture & Design Studio Kimberly-Clark Corporation MedCath Corporation ‡ Garden Ridge Kindred Hospital Central Tampa Medrad, Inc. Gateway Technical College Kinetics Merck & Co., Inc. GenelabsTechnologies, Inc. Kirkwood Community College Merck Frosst Canada Ltd. General Motors Powertrain KLA-Tencor Mercy Health Center The Geo Group, Inc. Kling ‡ Merrill Lynch & Co., Inc. Georgia-Pacific Kopos & Baker Methodist Health System ‡ GlobalTox International Consultants Inc. Kraft Canada Inc., Ingleside Metro Richelieu ‡ Grant Thornton LLP Kraft Foods Inc. Metro Technology Centers

42 Leadership Forecast 2005–2006 Michigan Department of Transportation PHH Arval (a Cendant company) Sears, Roebuck and Co. Michigan Family Independence Agency Philips Medical Systems Select Specialty Hospital MidState Medical Center Pinellas County Government Selfhelp Community Services, Inc. Midwest Airlines Plastipak Packaging Inc. ‡ The ServiceMaster Company Millennium Chemicals, a Lyondell Company PNC Shands Jacksonville Mittal Canada Inc Power Integrations, Inc. Shelter Insurance Moog Inc. PPC SITEL Corporation Mosaic Praxair Canada Inc. ‡ Sobeys Québec ‡ Motorola, Inc. Presbyterian Healthcare Services SoftPros, Inc. ‡ Mountaire Farms of Delmarva ‡ PricewaterhouseCoopers, LLP Southside Community Hospital NANA Management Services Private Healthcare Systems Southwest Florida Water Management District National Air Cargo Progressive Insurance Stiles Machinery Inc. National City Corporation Providence Health System StorageTek National Engineering and Operations Voice Pullman Regional Hospital Strategic Performance Partners Communications QSC Systems, Inc. Strategic Products & Services Nationwide Insurance RCI-Cendant Corporation Studio K Southwest Nelda C. and H.J. Lutcher Stark Foundation Register.com Summa Health System ‡ New World Restaurant Group, Inc. ‡ Remote Dynamics, Inc. Sussek Machine Corporation Nicor Gas Respironics, Inc. The Taubman Company Nokia Inc. The Rochester Group, Inc. Telerx Northeast Georgia Health System Rockingham Memorial Hospital Teletech Northern California Presbyterian Homes and Services Rockwell Automation Power Systems Texas Chiropractic College Novation ‡ Rohm and Haas, Ringwood ‡ Texas Gas Service Co., a division of ONEOK ‡ OfficeMax Rottinghaus Company Inc. Texas Parks and Wildlife Department One to One Demonstrations Roundy’s Inc. Thiele Technologies, Inc. ORC Worldwide Royal Caribbean Cruises Ltd. Thomas & Betts, Inc. Orthodyne Electronics RUCEC TIB—The Independent BankersBank Ottumwa Regional Health Center The Sacramento Bee ‡ T-Mobile Overhead Door Corp. ‡ St. James Hospital and Health Centers ‡ TrailBlazer Health Enterprises, LLC Owens Corning St. John’s Medical Center Transamerica Occidental Life Insurance Company Pacific Gas and Electric Company St. Joseph Hospital Transocean Offshore Deepwater Drilling Inc. Pac-West Telecomm, Inc. St. Vincent Hospital Indianapolis Turlock Irrigation District Parker Hannifin Salem Communications Corporation U of C Federal Credit Union PennWell Corporation Sankyo Pharma Inc. UCLA, Campus Human Resources PepsiAmericas, Inc. SBC Communications Ultimate Electronics PFPC Worldwide Inc. Schreiber Foods Inc. Union Pacific Railroad Phelps County Regional Medical Center Sealed Air Corporation ‡ United Properties

43 United Sleep Products Eaton Limited Rolls-Royce plc ‡ University of Missouri Health Care EMC Computer Systems (UK) Limited Sanofi Aventis US Airways, Inc. ‡ Essex County Council Scottish Water US Army 314th Military Intelligence Battalion Exel StorageTek Via Christi Regional Medical Center General Motors/Vauxhall United Co-operatives Ltd Virginia Department of Transportation ‡ Gist Ltd Vicky Wright Associates VSEA GKN plc Vodafone ‡ W.S. Badcock Corporation Gold Medal Travel Group Plc Watson Wyatt LLP Walt Disney World Greater Manchester Police Wesleyan Financial Services Washington Trust Bank Grimsby Institute of Further & Higher Education ‡ West Nottinghamshire College Waterville TG Inc. Halcrow Group Ltd Westminster City Council ‡ Webster Financial Corporation ‡ Headquarters of the Royal School of Military Engineering Xstrata Plc Wells Fargo HM Prison Service WestCare Health System HQ 2 Div (British Army) ASIA Weston Solutions, Inc. Iron Mountain UK Ltd AB Food & Beverages Singapore Pte Ltd Weyerhaeuser Jobcentre Plus South West Abbott Lab. Services Corp. Taiwan Branch William Beaumont Hospital KBR Production Services ActMedia Singapore Pte Ltd Winter, Wyman & Company Kelly Services (UK & Ireland) Ltd Advanced Contact Solutions Woodbridge Group Kier Group AGI Corporation ‡ Wyeth Knowledge Motion Consulting Limited Alpha & Omega Semiconductor (Shanghai), Ltd. YMCA du Grand Montréal KPMG Analog Integrations Corporation YMCA of Greater Rochester ‡ L.G. Harris & Co. Ltd Astra Marine International Lloyd’s Register Avon Cosmetics (Taiwan) Ltd UNITED KINGDOM Nampak Plastics Ayala Systems Technology, Inc. Air Safety Support International Ltd Newcastle City Council ‡ Bangko Sentral ng Pilipinas Allied Distillers Limited ‡ NHS Scotland Bank Indonesia, The Central Bank Assessment and Qualifications Alliance Norfolk County Council of the Republic of Indonesia ‡ Associated British Foods North Tyneside Council BASF East Asia Regional Headquarters Ltd. Associated British Ports Northern Foods plc BASF PETRONAS Chemicals Sdn Bhd ‡ AstraZeneca Northrop Grumman Sperry Marine ‡ Bausch & Lomb BT Plc Northumbria Healthcare NHS Trust BDO Governance Advisory Sdn Bhd BT Wholesale ‡ Ofsted BenQ Corporation, Tiawan ‡ Coca-Cola Panasonic Europe Ltd BP Asia Pacific (Malaysia) Sdn Bhd CPP Group Plc Police National Legal Database BP China Dalkia Energy & Technical Services Ltd QinetiQ Ltd BP Migas ‡ Deloitte Touche Tohmatsu Reed Elsevier BP Zhuhai Chemical Co. Ltd. East Sussex Fire & Rescue Service Rethink Brand Loyalty PH, Inc.

44 Leadership Forecast 2005–2006 Bridgestone Corporation ‡ Eslite Corporation Mida Food Distributors, Inc. Bristol Myers Squibb Phils. Inc.—Mead Johnson Evergreen Marine Corp. (Taiwan), Ltd Mitsubishi Electric Building Techno-Service Co., Ltd. British American Tobacco HK ‡ Extreme Networks K.K. Modernage Design & Communications Pte Ltd British American Tobacco Malaysia Berhad Far Eastern Electronic Toll Collection Co., Ltd ‡ Moet Hennessy Asia Pacific British Council Hong Kong Fastech Synergy Philippines, Inc. Molex Taiwan Ltd. BUPA (Asia) Ltd Federal Express (Singapore) Pte Ldt Moog Controls Corp. C.L. Manabat & Co. Finance Division of China Airlines ‡ Multimedia Development Corporation Sdn Bhd ‡ Canon Marketing (M) Sdn Bhd Ford Lio Ho Motor Company NCIC Taiwan CAPCO Globe Telecom, Inc. NEC University, Ltd. CEI Contract Manufacturing Limited GMA Marketing & Productions, Inc. Nestle Malaysia Berhad Central Country Estate Inc. Goldheart Jewelry Pte Ltd New Zealand Milk (Philippines) Cerebos (Thailand) Ltd Hermes-Epitek Corp Nippon Meat Packers, Inc. Charter Chemical & Coating Corp. Hitachi Data Systems Pte Ltd Nokia (H.K.) Limited China Airlines ‡ Hitachi Global Storage Technologies Ocean Glass Public Company Limited ‡ China Airlines Ltd. Hong Kong Jockey Club ON Semiconductor (Malaysia) Sdn Bhd China American Petrochemical Co., Ltd. ‡ Hong Leong Management School Sdn Bhd ON Semiconductor Philippines, Inc. China Motor Corporation ‡ Hotai Motor Co Ltd Onyx Ta-ho Environmental Services Co Ltd Chinatrust Financial Holding Company ‡ Ichia Technologies, Inc ‡ Optimax Technology Corporation ‡ Citigroup Taiwan ‡ Innolux Display Corporation ‡ Pacific Antai Life Insurance Co. CLP Power Hong Kong Limited Intel Technology Philippines Pan Pacific Hotels and Resorts, Singapore Consumer Association of Singapore The Jakarta Post Panasonic Regional Training Center COSUMO Oil Co., Ltd. Janssen Cilag Asia Pacific Peak Resources Singapore Pte Ltd CTCI Corporation ‡ John Hancock Tianan Life Insurance Company Perum Bulog ‡ CyanSYS Pte Ltd Kampro Technology, Inc Philam Plans Cypress Semiconductor Kraft Foods, Greater China Philips Electronic Building Elements Dah Sing Bank Lam Research Singapore Pte Ltd Industries (Taiwan) Ltd. ‡ DaimlerChrysler Taiwan Ltd ‡ Landco Pacific Corporation Phoenix Precision Technology Corporation Deloitte Littelfuse Phils. Inc. PICK International Asset Management Co., Ltd ‡ Delta Electronics, Inc. L’Oreal Singapore Pte Ltd Planters Development Bank Development Bank of the Philippines Malayan Banking Berhad (Maybank) Plaridel Products & Services, Inc. DHL Express Manila North Tollways Corp. Printelligence pte. Ltd. Dunlop Slazenger Phils. Inc. MarkWELL International Prodisc Technology ‡ EASTMAN Chemical Malaysia Sdn Bhd Maxima Global Executive Search Pte Ltd Prudential of Taiwan ‡ EASTWEST Public Relations Pte Ltd MediaBUZZ Pte Ltd PSI Technologies Inc. Energizer Singapore Pte Ltd Medipharm (pvt) Ltd PT Adhi Karya (Persero), Tbk ‡ Equitable PCI Bank Medtronic China PT Astra Zeneca Indonesia Ericsson (China) Company Ltd. Metafora Business Associates PT Badak NGL

45 PT Bank Central Asia, Tbk ‡ Singapore Management University AUSTRALIA & NEW ZEALAND PT Bank International Indonesia, Tbk SMIS Corporation Berhad Accident Compensation Corporation ‡ PT Bank Mandiri (Persero) Tbk ‡ Sony Ericsson Mobile Communications Adult Multicultural Education Services PT Bank Niaga, Tbk ‡ (China) Co. LTD Alcoa World Alumina—Australia PT Bank Pan Indonesia, Tbk ‡ SPI Publishing Services AMES PT Bank Rakyat Indonesia (Persero), Tbk ‡ SPI Technologies Inc. AMP Services Limited PT Excelcomindo Pratama Sprint ANZ Banking Group PT HM Sampoerna, Tbk ‡ STANFILCO–A Division of Dole Philippines, Inc. ‡ Arup ‡ PT IBS Insurance Broking Service ‡ Sun Microsystems Pte Ltd AstraZeneca PT Indosat, Tbk SUNTORY Ltd. The Audit Office of New South Wales PT LippoBank, Tbk ‡ Sweet & Maxwell Asia, Malaysia Australia Post (Queensland) ‡ PT Matahari Putra Prima, Tbk ‡ Taipei Fubon Bank ‡ Australian Federal Police PT PermataBank, Tbk ‡ Taiwan Powder Technologies Australian Railroad Group ‡ PT Pertamina (Persero) ‡ Tata Johnson Controls Automotive ltd Australian Taxation Office PT PINDAD ‡ Technical Education and Skills Development Authority AXA New Zealand PT Soho Industri Pharmasi ‡ TEMIC Automotive (Philippines), Inc. Ballarat and Clarendon College PT Toyota Motor Manufacturing Indonesia Thainox Stainless Public Company Limited BDO PT United Tractors Tbk. ‡ Thomson HK Holdings Ltd. BlueScope Steel PT Yamaha Indonesia Motor Manufacturing ‡ TNS Taiwan BNP Paribas Raja Garuda Mas International Tokyu Corporation ‡ Boehringer Ingelheim Pty Limited Ramon Aboitiz Foundation Inc. Toshiba (Australia) Pty., Ltd. ‡ Brisbane City Council RDC Semiconductor Co., Ltd ‡ Toshikee Pte Ltd Bunnings Pty Ltd RIVARCHE International Pte Ltd Toyo Engineering Corporation Caloundra City Council Resources Engineering Services Inc. UCC Ueshima Coffee Co., Ltd. Canon Australia Robert Bosch (M) Sdn Bhd United Laboratories Inc. ‡ CCK Sovereign Alliance Rubicon Int’l Talent Exchange Pte Ltd University of Mindanao Centrelink ‡ SAIC Unocal Philippines Inc. ‡ Citibank Australia Pty Ltd St. Luke’s Medical Center ‡ Waterfront Hotels and Casinos Cochlear ltd SC Johnson WAYS Tech. Corporation Coles Myer Ltd ‡ Schawk (S) Pte Ltd Workforce Development Agency Coloplast PTY LTD Schweiger Marketing & Associates Wyeth Hong Kong Limited Computer Sciences Corporation ‡ Sealed Air Corporation Wyeth Philippines Inc. Credit Union Services Corporation Securities Commission Malaysia Yulon Nissan Motor Co. ‡ Crown Equipment Pty Ltd SGS Gulf Limited Zuellig Pharma Pte Ltd DaimlerChrysler Australia/Pacific SGS Hong Kong Ltd. ZyXEL Communications Corporation ‡ Dairy Farmers ‡ ShinKong Life Insurance Co. ‡ Datamail Ltd ‡ Siam Pulp and Paper Co. Ltd Deloitte

46 Leadership Forecast 2005–2006 Dimension Data Australia Nutrimetics International EUROPE Dun & Bradstreet Oxford Funding Pty Ltd Adidas-Salomon AG THE EDGE Paperlinx Alpha Management GmbH Emerson Process Management Perpetual ‡ ALSTOM AG ‡ Environment Canterbury ‡ Port of Brisbane Corporation ARCELOR Ernest Henry Mining Promina ‡ Arvato Services Factiva Queensland Rail Assedic de Basse Normandie The Federal Publishing Company Queensland Transport aTmos GmbH Feltex Carpets Ravensdown Fertiliser Cooperative AutoContact GE Money RCI Pacific Pty Ltd Avis Autovermietung GmbH & Co KG Gillette Australia Pty Ltd Reckitt Benckiser (Australia Pty Limited) Bayer HealthCare AG Gordon Institute of TAFE Schneider Electric Benteler Automobiltechnik GmbH Hally Group Seiko Australia Pty Ltd BIC SA Hastings Deering Australia Ltd Sensis ‡ Bierbaum-Proenen ‡ Heineken Lion Suncorp BMW Financial Services HLA Envirosciences TAFE Tasmania BRAHMS AG Howard Marketing Services Target Australia Pty Ltd Braun Medical SAS ING DIRECT Techscape Limited Bridgestone France Inner Eastern Group Training TeleTech Pty Ltd ‡ Business Objects Integral Energy Telstra ‡ Campbell France SAS International Worklearn Telwater CAVAMAC ‡ Macquarie Bank Thiess John Holland Cercle Magellan Mater Education Centre Thomson Legal and Regulatory Chapus Conseil Mater Health Services Toshiba ‡ DaimlerChrysler AG Mayne Pharma TOWER Australia Ltd Deloitte Medibank Private Toyota Australia Deloitte Central Europe Members Equity Tyco Healthcare ‡ DeMIX Metcash Trading Ltd ‡ UFS Dispensaries Ltd. Dow Chemical Europe GmbH The Metricon Group University of Ballarat Ecolab GmbH & Co. OHG Metrowater Ltd University of Southern Queensland ELECTRABEL GROUPE SUEZ Minter Ellison VicRoads Epigenomics AG National Foods Limited ‡ Virgin Blue Airlines ESSEC Nestle Australia Ltd Western Mailing Limited Evert Temminck b.v. News Limited Wizard Home Loans Factiva Nobel Biocare Australia Pty WorkFocus Australia Faurecia Novo Nordisk Pharmaceuticals The Wrigley Company (NZ) Ltd Fiducial Expertise NSW Department of Sport & Recreation ‡ Wyeth Australia Pty Ltd Fondation De Francr Nufarm Limited Fraport AG

47 Fraunhofer-Gesellschaft Musgrave SuperValu Centra Vaillant GmbH Fronius International GmbH Nis Consulting Vielife Fujitsu Microelectronics Europe GmbH Pernod Ricard Europe Volkswagen Coaching GmbH GARF Phillips France VVF Vacances GEFCO ‡ Polyone ‡ Wacker Chemie GmbH GEFCO Deutschland GmbH Rabobank International Wal-Mart Germany GmbH & Co. KG GmbH RENAULT SA Wyeth Medica Ireland Goodyear Luxembourg Tires SA REUNICA GrandVision Rolls-Royce Deutschland Ltd & Co. KG LATIN AMERICA Groupe Merlane RWE Systems AG AEROQUIP SERVICIOS S.A. de C.V. ‡ Groupe Societe Generale SABIC Deutschland GmbH & Co. KG American International Insurance Company of PR (AIG) Groupe Virgin Stores SABIC EUROPE Amgen Mfg. Ltd. HACHETTE-LIVRE SABIC EuroPetrochemicals Ana G. Mendez University System Heineken France Sachsen LB Associates Finance ‡ Heraeus Holding GmbH Sanford (Waterman, Parker) Autotek industrial de México (MAGNA) HypoVereinsbank Sara Lee Corporation Banco Gubernamental de Fomento de Puerto Rico IKEA SAS Autosysttemtechnik Verwaltungs GmbH BISON BUILDING MATERIAL Infraserv GmbH & Co. Hochst KG SAS Institute GmbH EMEA Caterpillar México S.A. de C.V. INGENICO Sealed Air GmbH The Coca-Cola Company Ingram Micro Holding GmbH SFR Cegetel Colgate Palmolive Johnson Controls Inc. USA/GmbH SGL Carbon AG CUMMINS S. de R. L. de C.V. ‡ Kadir Has University Shell DaimlerChrysler de México, S.A. de C.V. ‡ Karstadt Warenhaus AG SICRA DHL Central America Kodak SODEXHO ALLIANCE DOE RUN PERU S.R.L. ‡ KPMG S.A. SOFREAVIA El Nuevo Día Kraft Foods Osterreich Staff Planning Empresa Petrolera Chaco S.A. LSG Sky Chefs Deutschland GmbH Storagetek Fábricas Monterrey S.A. de C.V. Maersk France SA SUEZ General Motors de México Maesina Intl. Search TF1 SA Grupo Bimbo S.A. de C.V. ‡ MAG Systemes ThyssenKrupp VDM GmbH Grupo Cementos de Chihuahua ‡ Magna Services (Germany) GmbH TOKHEIM Grupo FEMSA División Empaque ‡ MANN+HUMMEL GMBH TOTAL Grupo Julio S.A. de C.V. MERCK KGaA Trygdeetatens arbeidslivssenter Guidant de Puerto Rico Merisant France SAS Tyco Electronics ITR de México Messier-Dowty Ucanss Lincoln Electric Mexicana , S.A. de C.V. ‡ Molex Holding GmbH UL International Germany GmbH Mazda Puerto Rico Molex Interconnect GmbH Universite de Craiova Merck Sharp & Dohme

48 Leadership Forecast 2005–2006 Merck Sharp & Dohme Puerto Rico ‡ OTHER Heraeus Chemicals MOVA Pharmaceutical ‡ ACE Hardware ‡ Johnson Matthey Environmental Catalyst Technologies ‡ ORIGEL Adcock Ingram Healthcare ‡ Leask & Partners Pepsico Internacional Latinoamérica ADT Security Microsoft Europe, Middle East, Africa Pfizer, S.A. de C.V. AIC Insurance Mobile Telephones Network Productora de Papeles S.A. PROPAL ‡ Al-Futtaim Group Natal Sharks Board Quest Diagnostics Puerto Rico Al-Futtain Private Co. LLC ‡ National Treasury Rich Products México Calsonic Kansei SA (Pty) Ltd Netcare911 Secretaría de Educación del Estado de D.I.O.R.H. Network Healthcare Holdings Guanajuato—Delegación Acambaro Debswana Diamond Company Pep, a division of Pepkor Retail Secretaría de Educación del Estado de Deloitte & Touche—Guam SABIC ‡ Guanajuato—Delegación Regional VI Sur Oeste Dispatch Media (Pty) Ltd St. George’s Prep School Silices de Veracruz, S.A. de C.V. Eli Lilly (SA) (Pty) Ltd Samancor Ltd UCB Pharma Emirates ‡ South African Breweries Ltd Warner Chilcott Puerto Rico Emmanuels Swartland Group Wyeth Pharmaceuticals ‡ Esatern Cape Tourism Board Tyco Fire & Security (ADT Security SA) ‡ Zona Franca Multimodal Caucedo; Dubai port Eveready (Pty) Ltd Wyeth South Africa (Pty) Ltd International ‡ Global Resorts GUD FILTERS PTY LTD

* When completing the HR survey, each respondent was asked to type the full name of the organization he or she represented. In publishing the list of participating organizations, DDI cannot assume responsibility for errors in spelling or other errors in the information provided by these individuals. This list does not include organizations that wish to remain anonymous.

49 ABOUT THE AUTHORS

R is both manager of DDI’s Center for Applied Behavioral Research and director of DDI’s HR Benchmark Group. Paul has conducted audits and evaluations of selection systems in such organizations as Steelcase, Tenet Healthcare Corporation, Bic Corporation, Oracle, and 7-Eleven. A recognized expert in measurement and evaluation of HR systems, Paul has had his work published in Training & Development Journal, Group and Organizational Management, USA Today, and U.S. News & World Report.

RICR I is a senior vice president at DDI. Rich is responsible for leading DDI’s research programs, launching new solutions, building strategic alliances, and executing marketing strategies. During his tenure at DDI, Rich has authored five books on leadership and teams. Most recently, he served as DDI’s overall project leader in the development of a new competency model for workplace learning professionals, sponsored by the American Society for Training and Development. Currently, he is involved in consulting engagements with Leed’s, Texas Children’s Hospital, and Grant Thornton.

ABOUT THE RESEARCH TEAM

Co-Managing Director, DDI Europe RICR I Managing Director, DDI Latin America Steve works with DDI’s major clients to identify needs and Ricardo is a master in total quality management. He works propose solutions, specifically in early identification of with clients in Brazil, Mexico, and Puerto Rico to help leadership potential, talent and succession management, address their leadership, work teams, succession and large-scale selection solutions. His views on HR issues management, and executive challenges. He also is have appeared in numerous publications, and he has spoken at several responsible for DDI’s delivery capabilities in Latin America. industry-specific events, such as the Richmond Event’s HR Forum and the IQPC European Human Capital Event.

Leadership Forecast 2005–2006 RI I G Vice President/Managing II CI President of Management Service Director, Asia Center Co., Ltd., DDI’s affiliate in Japan Mr. Tan Li Tong uses his 20-plus years of experience to work Mr. Takeuchi has significant experience in the HR arena, with clients in diverse industries, providing consulting in working with both domestic Japanese and foreign leadership development, executive assessment, multinational organizations. For the past 13 years, he has performance-driven management systems, teams, and companywide been specializing in strategic/operational leadership assessment, training, change intervention strategies. He is frequently invited to speak at various and development. He currently is an active member of the Japan international events and is regularly quoted by the Asian media on current Association of Humanistic Psychology. trends and issues.

RC Managing Director, DDI Australia Bruce’s primary areas of expertise are in the diagnosis and development of executive capability and the design and implementation of executive selection and succession management systems. In addition to his consulting experience, Bruce is a frequent speaker at Australian conferences and has lectured at several universities. He also is a sought-after spokesperson by the media regarding leadership issues.

ACKNOWLEDGEMENTS

This study was a true international effort, and the authors and research team would like to acknowledge the invaluable contributions of the following people:

Project management: ason onra an o Recruitment: witri itini areta erens ar sine ietta Cervantes e oro arara neann io asioto ristna erees Gee vonne Gowan osaas ai en an Editorial: ie Crawer awn Garr Cris e Graphic design: isa eant anet iar

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